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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~March~~December 31, 2022


☐			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)

Delaware		26-1119726
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
2605 Meridian Parkway, Suite 200		27713
350 Mt. Kemble Avenue		07960
Durham,	North Carolina
Morristown,	New Jersey
(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 Class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock	AVYA	New 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, 2023, 86,846,958 shares of common stock, $.01 par value, of the registrant were outstanding.

TABLE OF CONTENTS

Item	Description	Page
	PART I—FINANCIAL INFORMATION
1.	Financial Statements	1
2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	2835
3.	Quantitative and Qualitative Disclosures About Market Risk	4248
4.	Controls and Procedures	4349
	PART II—OTHER INFORMATION
1.	Legal Proceedings	4452
1A.	Risk Factors	4452
2.	Unregistered Sales of Equity Securities and Use of Proceeds	4652
3.	Defaults Upon Senior Securities	4652
4.	Mine Safety Disclosures	4652
5.	Other Information	4652
6.	Exhibits	4753
7.	Signatures	4854

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 (this "Quarterly Report") 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.

Explanatory Note

As previously disclosed in the Company’s NT 10-Q (the "12b-25") filed with the U.S. Securities & Exchange Commission (the “SEC”) on February 10, 2023, the Company was not able to timely file its quarterly report on Form 10-Q because the audit committee (the “Audit Committee”) of the Company’s board of directors was conducting internal investigations to review, among other things, the circumstances surrounding the Company’s financial results for the quarter ended June 30, 2022 and items related to a whistleblower claim. The Audit Committee has completed its planned procedures with respect to its investigations and continues to cooperate with the SEC's ongoing investigation, which could require additional procedures to be performed. The results of the investigations are disclosed in Note 1, "Background and Basis of Presentation," to the Company's Condensed Consolidated Financial Statements. Additionally, the Company has completed its impairment assessment of its long lived assets, including its intangible assets. The Company has also determined that its internal control over financial reporting is not effective as of December 31, 2022 as a result of material weaknesses disclosed in Item 4.

Additionally, on February 14, 2023 (the “Petition Date”), Avaya Holdings Corp. (“Avaya Holdings”) and certain of its direct and indirect subsidiaries (the “Debtors”) commenced voluntary cases (the “Chapter 11 Cases”) under Chapter 11 of Title 11 of the United States Code (the “Bankruptcy Code”) in the United States Bankruptcy Court for the Southern District of Texas (the “Bankruptcy Court”). On the Petition Date, the Company entered into a Restructuring Support Agreement (the “RSA”) with certain of its creditors that contemplated a prepackaged joint plan of reorganization (the “Plan”). The implementation of the Plan pursuant to the RSA did not provide for any recovery for holders of the Company’s existing common stock, par value $0.01 per share (the “Common Stock”) or Series A Convertible Preferred Stock, par value $0.01 per share (the "Series A Preferred Stock").

After the Petition Date, following the effectiveness of a Form 25-NSE and the filing of post-effective amendments to outstanding registration statements to remove unsold securities, the Company filed a Form 15 with the United States Securities and Exchange Commission (the "SEC") to deregister its Common Stock under the Securities Exchange Act of 1934 (the “Exchange Act”) and to suspend its reporting obligations pursuant to Section 15(d)(1) of the Exchange Act, because the Company had less than 300 holders of record of each class of securities to which Securities Act registration statements related at the beginning of its 2023 fiscal year. The Company is filing this report to comply with its obligations to file all reports required to be filed with the SEC not filed prior to the filing of the Form 15.

The Bankruptcy Court confirmed the Plan on March 22, 2023, and the Debtors satisfied all conditions required for Plan effectiveness and emerged from the Chapter 11 Cases as a non-reporting private company on May 1, 2023 (the "Emergence Date").

Table of Contents

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 endedMarch 31,				Six months endedMarch 31,
	Three months endedDecember 31,
	2022		2021		~~2022~~		~~2021~~
REVENUE
Products	$	~~223~~136	$	~~226~~231	$	~~454~~	$	~~492~~
Services	~~493~~282		~~512~~482		~~975~~		~~989~~
	716		738		1,429		1,481
	418		713
COSTS
Products:
Costs	~~119~~70		92111		~~230~~		~~197~~
Amortization of technology intangible assets	35		4342		77		86
Services	~~191~~165		191		~~382~~		~~370~~
	345		326		689		653
	270		344
GROSS PROFIT	~~371~~148		~~412~~369		~~740~~		~~828~~
OPERATING EXPENSES
Selling, general and administrative	~~245~~221		~~264~~262		~~507~~		~~519~~
Research and development	6050		5761		~~121~~		~~112~~
Amortization of intangible assets	4039		3940		80		79
Restructuring charges, net	3		8		10		12
Impairment charges	9		—
	348		368		718		722
Restructuring charges, net	10		7
OPERATING INCOME	23		44		22		106
	329		370
Interest expense	(54)		(59)		(108)		(115)
OPERATING LOSS	(181)		(1)
Other income, net	17		1		24		1
Interest expense	(5)		(54)
LOSS BEFORE INCOME TAXES	(14)		(14)		(62)		(8)
Other (expense) income, net	(4)		7
Benefit from (provision for) income taxes	13		(44)		(5)		(54)
LOSS BEFORE INCOME TAXES	(190)		(48)
NET LOSS	$	(1)	$	(58)	$	(67)	$	(62)
Benefit from (provision for) income taxes	26		(18)
LOSS PER SHARE
NET LOSS	$	(164)	$	(66)
Basic	$	(0.02)	$	(0.70)	$	(0.81)	$	(0.76)
LOSS PER SHARE
Diluted	$	(0.02)	$	(0.70)	$	(0.81)	$	(0.76)
Basic	$	(1.89)	$	(0.79)
Weighted average shares outstanding
Diluted	$	(1.89)	$	(0.79)
Basic	85.6		84.6		85.1		84.2
Weighted average shares outstanding
Diluted	85.6		84.6		85.1		84.2
Basic	87.5		84.7
Diluted	87.5		84.7

The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these statements.

Table of Contents

Avaya Holdings Corp.

Condensed Consolidated Statements of Comprehensive ~~Income~~Loss (Unaudited)

(In millions)

	Three months endedMarch 31,				Six months endedMarch 31,
	Three months endedDecember 31,
	2022		2021		~~2022~~		~~2021~~
Net loss	$	(1164)	$	(5866)	$	~~(67)~~	$	~~(62)~~
Other comprehensive income:
Other comprehensive (loss) income:
Pension, post-retirement and post-employment benefit-related items, net of income taxes of $0 for both the three and six months ended March 31, 2022, and $(1) for both the three and six months ended March 31, 2021	(2)		34		(3)		46
Pension, post-retirement and post-employment benefit-related items, net of income taxes of $0 for both the three months ended December 31, 2022 and 2021, respectively	(6)		(1)
Cumulative translation adjustment	1(14)		2113		14		15
Change in interest rate swaps, net of income taxes of $(14) for both the three and six months ended March 31, 2022 and $0 for both the three and six months ended March 31, 2021	40		30		68		41
Change in interest rate swaps, net of income taxes of $(18) and $0 for the three months ended December 31, 2022 and 2021, respectively	(80)		28
Other comprehensive income	39		85		79		102
Other comprehensive (loss) income	(100)		40
Total comprehensive income	$	38	$	27	$	12	$	40
Total comprehensive loss	$	(264)	$	(26)

The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these statements.

Table of Contents

Avaya Holdings Corp.

Condensed Consolidated Balance Sheets (Unaudited)

(In millions, except per share and share amounts)

	March 31, 2022		September 30, 2021
	December 31, 2022		September 30, 2022
ASSETS
Current assets:
Cash and cash equivalents	$	~~324~~225	$	~~498~~253
Accounts receivable, net	315		307
Restricted cash	223		222
Inventory	49		51
Accounts receivable, net	302		322
Contract assets, net	640		518
Inventory	81		74
Contract costs	115		117
Contract assets, net	505		543
Other current assets	132		100
Contract costs	104		110
TOTAL CURRENT ASSETS	1,575		1,591
Other current assets	113		116
Property, plant and equipment, net	301		295
TOTAL CURRENT ASSETS	1,553		1,640
Deferred income taxes, net	31		40
Property, plant and equipment, net	280		281
Intangible assets, net	21,~~078~~695		21,~~235~~776
Goodwill	1,476		1,480
Operating lease right-of-use assets	90		97
Operating lease right-of-use assets	118		135
Other assets	229		279
Other assets	245		209
TOTAL ASSETS	$	3,847	$	4,073
TOTAL ASSETS	$	5,824	$	5,985
LIABILITIES
Current liabilities:
Accounts payable	$	306	$	295
Debt maturing within one year	$	3,358	$	210
Payroll and benefit obligations	128		193
Accounts payable	263		263
Contract liabilities	315		360
Payroll and benefit obligations	105		108
Operating lease liabilities	44		49
Contract liabilities	255		245
Business restructuring reserves	16		19
Operating lease liabilities	40		40
Other current liabilities	139		181
Business restructuring reserves	19		26
TOTAL CURRENT LIABILITIES	948		1,097
Other current liabilities	137		137
TOTAL CURRENT LIABILITIES	4,177		1,029
Non-current liabilities:
Long-term debt	~~2,827~~—		23,~~813~~032
Pension obligations	~~607~~434		~~648~~410
Other post-retirement obligations	~~151~~111		~~153~~109
Deferred income taxes, net	7342		5343
Contract liabilities	~~309~~287		~~305~~300
Operating lease liabilities	8766		~~102~~72
Business restructuring reserves	1926		2523
Other liabilities	~~240~~207		~~267~~224
TOTAL NON-CURRENT LIABILITIES	41,~~313~~173		4,~~366~~213
TOTAL LIABILITIES	5,~~261~~350		5,~~463~~242
Commitments and contingencies (Note 18)
Preferred stock, $0.01 par value; 55,000,000 shares authorized at March 31, 2022 and September 30, 2021
Preferred stock, $0.01 par value; 55,000,000 shares authorized at December 31, 2022 and September 30, 2022
Convertible series A preferred stock; 125,000 shares issued and outstanding at March 31, 2022 and September 30, 2021	131		130
Convertible series A preferred stock; 125,000 shares issued and outstanding at December 31, 2022 and September 30, 2022	134		133
STOCKHOLDERS' EQUITY
STOCKHOLDERS' DEFICIT
Common stock, $0.01 par value; 550,000,000 shares authorized; 85,677,909 shares issued and outstanding at March 31, 2022; and 84,115,602 shares issued and outstanding at September 30, 2021	1		1
Common stock, $0.01 par value; 550,000,000 shares authorized; 86,846,958 shares issued and outstanding at December 31, 2022 and September 30, 2022	1		1
Additional paid-in capital	1,~~495~~428		1,~~467~~546
Accumulated deficit	(13,~~052~~198)		(~~985~~3,081)
Accumulated other comprehensive loss	(12)		(91)
Accumulated other comprehensive income	132		232
TOTAL STOCKHOLDERS' EQUITY	432		392
TOTAL STOCKHOLDERS' DEFICIT	(1,637)		(1,302)
TOTAL LIABILITIES, PREFERRED STOCK AND STOCKHOLDERS' EQUITY	$	5,824	$	5,985
TOTAL LIABILITIES, PREFERRED STOCK AND STOCKHOLDERS' DEFICIT	$	3,847	$	4,073

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' (Deficit) Equity (Unaudited)

(In millions)

	Common Stock			AdditionalPaid-InCapital		Accumulated Deficit		~~AccumulatedOtherComprehensiveLoss~~AccumulatedOtherComprehensiveIncome (Loss)		TotalStockholders'(Deficit) Equity
	Shares	Par Value
Balance as of September 30, 2022	86.8	$	1	$	1,546	$	(3,081)	$	232	$	(1,302)
Share-based compensation expense				1						1
Preferred stock dividends accrued				(1)						(1)
Adoption of ASU 2020-06 (Note 2)				(118)		47				(71)
Net loss						(164)				(164)
Other comprehensive loss								(100)		(100)
Balance as of December 31, 2022	86.8	$	1	$	1,428	$	(3,198)	$	132	$	(1,637)
Balance as of September 30, 2021	84.1	$	1	$	1,467	$	(985)	$	(91)	$	392
Issuance of common stock under the equity incentive plan and the Stock Bonus Program	0.9			5						5
Issuance of common stock under the employee stock purchase plan	0.2			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 expense				14						14
Preferred stock dividends paid				(1)						(1)
Net loss						(66)				(66)
Other comprehensive income								40		40
Balance as of December 31, 2021	84.9	$	1	$	1,481	$	(1,051)	$	(51)	$	380
Issuance of common stock under the equity incentive plan	0.7									—
Issuance of common stock under the employee stock purchase plan	0.3			4						4
Shares repurchased and retired for tax withholding on vesting of restricted stock units	(0.2)			(3)						(3)
Share-based compensation expense				14						14
Preferred stock dividends accrued				(1)						(1)
Net loss						(1)				(1)
Other comprehensive income								39		39
Balance as of March 31, 2022	85.7	$	1	$	1,495	$	(1,052)	$	(12)	$	432
Balance as of September 30, 2020	83.3	$	1	$	1,449	$	(969)	$	(245)	$	236
Issuance of common stock under the equity incentive plan	0.3									—
Issuance of common stock under the employee stock purchase plan	0.3			3						3
Shares repurchased and retired for tax withholding on vesting of restricted stock units	(0.1)			(2)						(2)
Share-based compensation expense				14						14
Preferred stock dividends accrued				(1)						(1)
Adjustment for adoption of new accounting standard						(3)				(3)
Net loss						(4)				(4)
Other comprehensive income								17		17
Balance as of December 31, 2020	83.8	$	1	$	1,463	$	(976)	$	(228)	$	260
Issuance of common stock under the equity incentive plan	1.2			8						8
Issuance of common stock under the employee stock purchase plan	0.2			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 expense				13						13
Preferred stock dividends accrued				(1)						(1)
Net loss						(58)				(58)
Other comprehensive income								85		85
Balance as of March 31, 2021	84.7	$	1	$	1,472	$	(1,034)	$	(143)	$	296

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 endedMarch 31,
	Three months endedDecember 31,
	2022		2021
OPERATING ACTIVITIES:
Net loss	$	(67164)	$	(6266)
Adjustments to reconcile net loss to net cash (used for) provided by operating activities:
Adjustments to reconcile net loss to net cash used for operating activities:
Depreciation and amortization	~~203~~99		~~209~~104
Share-based compensation	281		2714
Amortization of debt discount and issuance costs	145		137
Loss on extinguishment of debt	—		1
Deferred income taxes, net	(19)		(4)
Deferred income taxes, net	15		(4)
Impairment charges	9		—
Gain on post-retirement plan settlement	—		(14)
Change in fair value of emergence date warrants	—		(1)
Change in fair value of emergence date warrants	(8)		27
Change in fair value of interest rate swap agreements	13		—
Unrealized (gain) loss on foreign currency transactions	(3)		12
Change in fair value of debt-related embedded derivatives	(16)		—
Other non-cash charges, net	1		1
Reclassification of AOCI associated with interest rate swaps	(62)		—
Unrealized gain on foreign currency transactions	10		(2)
Other non-cash charges, net	1		2
Changes in operating assets and liabilities:
Accounts receivable	~~(6)~~22		(1244)
Inventory	—(9)		31
Operating lease right-of-use assets and liabilities	(3)		2
Contract assets	48		(57)
Contract assets	(165)		(122)
Contract costs	13		(1)
Contract costs	1		(5)
Accounts payable	(4)		46
Accounts payable	12		21
Payroll and benefit obligations	(12)		(70)
Payroll and benefit obligations	(91)		(76)
Business restructuring reserves	(8)		(3)
Business restructuring reserves	(7)		(8)
Contract liabilities	(9)		(28)
Contract liabilities	(38)		(22)
Other assets and liabilities	17		(9)
Other assets and liabilities	1		33
NET CASH USED FOR OPERATING ACTIVITIES	(65)		(111)
NET CASH (USED FOR) PROVIDED BY OPERATING ACTIVITIES	(113)		24
INVESTING ACTIVITIES:
Capital expenditures	(5217)		(5327)
NET CASH USED FOR INVESTING ACTIVITIES	(5217)		(5327)
FINANCING ACTIVITIES:
Shares repurchased under share repurchase program	—		(7)
Borrowings under ABL Credit Agreement	90		—
Repayment of Term Loan Credit Agreement due to refinancing	—		(743)
Repayments of ABL Credit Agreement	(34)		—
Proceeds from Term Loan Credit Agreement due to refinancing	—		743
Principal payments for financing leases	(2)		(2)
Repayment of Term Loan Credit Agreement	—		(100)
Proceeds from Employee Stock Purchase Plan	—		4
Principal payments for financing leases	(4)		(8)
Proceeds from exercises of stock options	—		1
Payments for other financing arrangements	(1)		—
Preferred stock dividends paid	—		(1)
Proceeds from other financing arrangements	—		3
Shares repurchased for tax withholdings on vesting of restricted stock units and Stock Bonus Program shares	—		(7)
Debt issuance costs	—		(2)
NET CASH PROVIDED BY (USED FOR) FINANCING ACTIVITIES	54		(5)
Proceeds from Employee Stock Purchase Plan	7		7
Effect of exchange rate changes on cash, cash equivalents, and restricted cash	2		(1)
Proceeds from exercises of stock options	1		8
NET DECREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH	(26)		(144)
Preferred stock dividends paid	(1)		—
Cash, cash equivalents, and restricted cash at beginning of period	478		502
Shares repurchased for tax withholdings on vesting of restricted stock units and Stock Bonus Program shares	(10)		(9)
Cash, cash equivalents, and restricted cash at end of period	$	452	$	358
NET CASH USED FOR FINANCING ACTIVITIES	(8)		(108)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash	(1)		3
NET DECREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH	(174)		(134)
Cash, cash equivalents, and restricted cash at beginning of period	502		731
Cash, cash equivalents, and restricted cash at end of period	$	328	$	597

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 software 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 two 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, ~~2021~~2022, included in the Company's Annual Report on Form 10-K filed with the SEC on ~~November 22~~September 8, ~~2021~~2023. 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 unaudited 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 Condensed Consolidated Financial Statements in the period they are determined to be necessary. Actual results could differ from these estimates. The ~~spread~~ongoing of COVID-19, the effects on the Company's employees and the actions required to mitigate its impact have created substantial disruption to the global economy. In addition, we have experienced and are experiencing varying levels of inflation resulting in part from various supply chain disruptions, including, but not limited to increased shipping and transportation costs and increased raw material costs caused by the COVID‐19 pandemic and general global economic conditions. Furthermore, the military conflict between Russia and Ukraine, including the sanctions and export controls that have been imposed by the U.S. and other countries in response to the conflict, severely limits commercial activities in Russia and impacts other markets where we do business. ~~These~~This global ~~issues~~issue, among others, have resulted in elevated levels of inflation throughout the world, increased raw material costs and other supply chain issues all of which 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. ~~The COVID-19 pandemic and the Russia/Ukraine conflict did not have a material impact on the Company's operating results during the second quarter of fiscal 2022.~~

WeBoard ~~believe that our existing cash~~ and ~~cash~~Audit ~~equivalents~~Committee 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. We expect to seek incremental financing to fund the maturity of the $350 million Convertible 2.25% Senior Notes due June 15, 2023. There can be no assurance we will be able to obtain such financing on acceptable terms. Investigations

2In February 2023, the Company announced a delay in the filing of its Quarterly Report on Form 10-Q (this "Quarterly Report") for the quarter ended December 31, 2022, due to, among other things, the commencement of an investigation by the audit committee (the "Audit Committee", and such investigation, the "Financial Results Investigation") of the Company's board of directors (the "Board") related to the circumstances surrounding the Company's financial results for the third quarter of fiscal 2022, which were significantly lower than the Company's expectations and previously issued guidance. ~~Recent~~ ~~Accounting~~This ~~Pronouncements~~investigation also addressed the information provided by the Company to the lenders of the Tranche B-3 Term Loans and the 8.00% Exchangeable Senior Secured Notes due 2027 which was funded in July 2022 as discussed in Note 7, "Financing Arrangements."

~~Recent~~The ~~Standards~~Company ~~Not~~also ~~Yet~~announced ~~Adopted~~the Audit Committee had commenced a separate internal investigation to review matters related to a whistleblower letter (the "Whistleblower Letter Investigation"). The Company engaged outside counsel, which reported to the Audit Committee, to assist in these investigations and notified the SEC and the Company's external auditor, PricewaterhouseCoopers LLP, about the investigations at that time.

In March 2020, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2020-04, Reference Rate Reform (Topic 848): "Facilitation of the Effects of Reference Rate Reform on Financial Reporting". This standard, along with other guidance subsequently issued by the FASB, contains practical expedients for reference rate reform related activities that impact debt, derivatives and other contracts. The guidance in this standard is optional and may be elected

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atThe ~~any~~Company ~~time~~also asannounced ~~reference~~in ~~rate~~August ~~reform~~2022 ~~activities~~that ~~occur.~~it ~~The~~was ~~standard~~reviewing ~~may~~matters berelated ~~applied~~to ~~prospectively~~the tomaintenance ~~contract~~of ~~modifications~~its ~~made~~whistleblower log and ~~hedging~~the ~~relationships~~proper ~~entered~~dissemination ~~into~~of orrelated ~~evaluated~~information onand ormaterials. ~~before~~The ~~December~~review ~~31,~~related ~~2022.~~to ~~The~~an ~~Company~~email ~~intends~~received by a Board member prior to ~~use~~the filing of the ~~expedients,~~Company's ifAnnual ~~needed,~~Report on Form 10-K for fiscal year ended September 30, 2021 (the ~~reference~~"2021 ~~rate~~Form ~~transition~~10-K"). ~~The~~Upon ~~Company~~receipt ~~continues~~of tothe ~~monitor~~email, ~~activities~~the ~~related~~Board determined to ~~reference~~undertake ~~rate~~an ~~reform~~investigation, ~~and~~assisted ~~does~~by ~~not~~outside ~~currently~~counsel ~~expect~~(the ~~this~~“Whistleblower ~~standard~~Email toInvestigation” ~~have~~and atogether ~~material~~with ~~impact~~the onFinancial Results Investigation and the ~~Company's~~Whistleblower ~~Condensed~~Letter ~~Consolidated~~Investigation, ~~Financial~~the ~~Statements~~"Investigations"). Upon conclusion of the Whistleblower Email Investigation, it was determined that the claims included were unsubstantiated (see Note 18, "Commitments and Contingencies").

InAvaya ~~August~~notified ~~2020,~~ the ~~FASB~~SEC ~~issued~~of ASU 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~~Investigations ~~for convertible instruments~~ and the ~~application~~SEC ofinitiated ~~the derivatives scope exception for contracts in~~ an ~~entity's~~investigation ~~own~~to ~~equity.~~review, ~~The~~among ~~standard~~other ~~also~~things, ~~amends~~ the ~~accounting~~circumstances ~~for~~surrounding ~~convertible instruments in the diluted earnings per share calculation and requires enhanced disclosures of convertible instruments and contracts in an entity~~Avaya's ~~own~~financial ~~equity.~~results ~~This standard is effective~~ for the ~~Company in the first~~ quarter ofended ~~fiscal~~June ~~2023.~~30, ~~The adoption may be applied on a modified or fully retrospective basis~~2022. 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.

InOn ~~October~~February ~~2021~~10, 2023, the ~~FASB~~Company ~~issued~~filed ~~ASU~~a ~~2021~~Form 12b-~~08,~~25 ~~Business~~announcing ~~Combinations~~a ~~(Topic~~delay ~~805):~~in ~~“Accounting~~the ~~for~~filing ~~Contract~~of ~~Assets~~its ~~and~~Quarterly ~~Contract~~Report ~~Liabilities~~on ~~from~~Form ~~Contracts~~10-Q ~~with~~for ~~Customers.”~~the ~~This~~three ~~standard~~months ~~requires~~ended ~~contract~~December ~~assets~~31, ~~and~~2022. ~~contract~~As ~~liabilities~~a ~~acquired~~result inof athe ~~business~~activities ~~combination~~noted toabove, bethe ~~recognized~~Company inrequired ~~accordance~~additional ~~with~~time ~~Topic~~to ~~606~~complete asits ifreview ~~the~~of ~~acquirer~~its ~~had~~financial ~~originated~~statements ~~the~~and ~~contracts.~~other ~~This~~disclosures ~~standard~~as isof ~~effective~~December ~~for~~31, ~~the~~2022, ~~Company~~and into ~~the~~complete ~~first~~its ~~quarter~~quarterly ofclosing ~~fiscal~~processes ~~2024~~and controls, ~~with~~and ~~early~~was ~~adoption~~unable ~~permitted.~~to ~~The~~file ~~impact~~its ofQuarterly ~~this~~Report ~~standard~~on ~~will~~Form ~~depend~~10-Q on or prior to the ~~nature~~prescribed ofdue ~~future~~date ~~transactions~~of ~~within~~February ~~its~~9, ~~scope~~2023.

InThe ~~March~~Audit ~~2022,~~Committee ~~the~~has ~~FASB~~completed ~~issued~~its ~~ASU~~planned ~~2022-02,~~procedures ~~“Financial~~with ~~Instruments~~respect –to ~~Credit~~its ~~Losses~~Investigations ~~(Topic 326): Troubled Debt Restructurings~~ and ~~Vintage~~continues ~~Disclosures”.~~to ~~This~~cooperate ~~standard~~with ~~requires~~the anSEC's ~~entity to disclose current~~on-~~period~~going ~~gross~~investigation, ~~write-offs~~which bycould ~~year~~require ofadditional ~~origination~~procedures ~~for~~to ~~financing~~be ~~receivables and net investment in leases measured at amortized cost~~performed. The ~~standard~~Audit ~~also~~Committee ~~eliminates~~identified ~~the~~several ~~existing~~contributing ~~troubled~~factors ~~debt~~for ~~restructuring~~the ~~recognition~~significant ~~and~~differences ~~measurement~~between ~~guidance and, instead, requires an entity to evaluate whether~~ the ~~modification~~Company's ~~represents~~forecasts aand ~~new~~actual ~~loan~~financial orresults ~~a continuation of an existing loan in a manner consistent with other loan modifications. This standard is effective~~ for the ~~Company~~third ~~in the first~~ quarter of fiscal ~~2024~~2022, ~~with early adoption permitted. The Company is currently assessing the impact the new guidance will have on its Condensed Consolidated Financial Statements.~~ including:

•Inappropriate tone at the top among certain members of senior management, which resulted in a corporate culture characterized by significant pressure to meet aggressive sales projections and a failure to foster an environment of appropriate and open communication of significant matters throughout the organization and with others outside of the organization;

•A declining pipeline of existing legacy customers (with expiring maintenance contracts) eligible for migration to the Company's subscription model;

•A business model in which a significant portion of quarterly revenue is generated at the end of each quarter, making it difficult to accurately forecast revenue;

•Adverse market conditions, as well as concerns that arose during the third quarter about the Company's financial health, which negatively influenced customer sentiment; and

•The ineffective control environment with respect to tone at the top noted above contributed to additional material weaknesses, that the Company did not design and maintain effective controls over the information and communication component of the Committee of Sponsoring Organizations of the Treadway Commission ("COSO") framework which led to an additional material weakness with respect to the ethics and compliance program. The Company did not maintain a complete and accurate whistleblower log and did not inform certain members of senior management and its external auditor about an investigation undertaken by a committee of the Board of Directors.

In addition, the investigation identified revenue of $3 million that was recognized for product shipments during the three months ended March 31, 2022 that had rights of return and, accordingly, should not have been recognized as revenue. The Company corrected this error during the three months ended June 30, 2022. This out-of-period correction was not material to any interim period and had no impact on the financial results for the year ended September 30, 2022.

The SEC is investigating the matters underlying the Audit Committee's investigation and may be subject to additional regulatory or legal proceedings. These investigations and legal proceedings may result in adverse findings, damages, the imposition of fines or other penalties, increased costs and expenses as well as the diversion of management's time and resources.

Chapter 11 Filing

On February 14, 2023 (the "Petition Date"), Avaya Holdings and certain of its direct and indirect subsidiaries (collectively, the "Debtors") commenced voluntary cases (the "Chapter 11 Cases") under Chapter 11 of Title 11 of the United States Code (the "Bankruptcy Code") in the United States Bankruptcy Court for the Southern District of Texas. The Chapter 11 Cases were jointly administered under the caption In re Avaya Inc., et al., case number 23-90088.

On the Petition Date, the Company entered into a Restructuring Support Agreement (the "RSA") with certain of its creditors (the "Consenting Stakeholders") and RingCentral, Inc. ("RingCentral"). The RSA contemplated a prepackaged joint plan of reorganization (the "Plan"). The Plan provided for (i) the commencement of the Chapter 11 Cases, (ii) debtor-in-possession financing facilities in the aggregate amount of approximately $628 million that were subsequently converted into exit financing facilities upon the Company's Emergence (as defined below), (iii) a fully backstopped $150 million rights offering, (iv) payment in full of all trade liabilities, (v) the repayment of approximately $225 million escrowed cash to certain senior lenders

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and (vi) entry into amended and restated agreements with RingCentral (the "Amended and Restated RingCentral Agreements") that collectively govern the Company's commercial relationship with RingCentral upon Emergence (which agreements were entered into immediately prior to, and in connection with, the execution of the RSA).

The RSA and the Plan did not contemplate any recovery for holders of the Company's existing common stock, par value $0.01 per share (the "Common Stock") or Series A Convertible Preferred Stock, par value $0.01 per share (the "Series A Preferred Stock").

On February 15, 2023, trading in the Company's Common Stock on the New York Stock Exchange ("NYSE") was permanently suspended and the Common Stock was delisted from the NYSE effective February 25, 2023.

To ensure their ability to continue operating in the ordinary course of business, the Debtors filed a variety of motions seeking "first day" relief, including the authority to continue using their cash management system, pay employee wages and benefits and pay vendors in the ordinary course of business. As of March 22, 2023, all "first day" relief had been granted by the Bankruptcy Court on a final basis.

The commencement of the Chapter 11 Cases constituted an event of default that accelerated and, as applicable, increased certain obligations under each of the Term Loan and ABL Credit Agreements and the indentures governing the Senior Notes, the Convertible Notes and the Exchangeable Notes (each as defined below) (collectively the "Pre-Petition Debt Instruments") and agreements described in Note 7, "Financing Arrangements," other than the DIP Term Loan (as defined below) and the DIP ABL Loan (as defined below). At December 31, 2022, all debt was classified as a current liability based on the Company's violation of certain covenants in December 2022.

The Pre-Petition Debt Instruments provided that, as a result of the Chapter 11 Cases, the principal and interest and certain other amounts (to the extent applicable) due thereunder were immediately due and payable. Any efforts to enforce such payment obligations under the Pre-Petition Debt Instruments against the Debtors were automatically stayed as a result of the Chapter 11 Cases, and the creditors' rights of enforcement in respect of the Pre-Petition Debt Instruments were subject to the applicable provisions of the Bankruptcy Code.

Under the Plan, holders of pre-petition claims were not required to file proofs of claim and all filed proofs of claim were automatically considered objected and disputed, and all other claims (other than cure disputes/rejection claims) were deemed withdrawn and expunged as of May 1, 2023 (the "Emergence Date"). On the Emergence Date, the Company reviewed claims that had been filed and updated the claims register to reflect whether claims had been withdrawn, expunged or satisfied, as applicable, as of the Emergence Date and did not identify any adjustments to its consolidated financial statements.

Subject to certain specific exceptions under the Bankruptcy Code, the Chapter 11 Cases automatically stayed most judicial or administrative actions against the Debtors and efforts by creditors to collect on or otherwise exercise rights or remedies with respect to pre-petition claims.

The Debtors operated as debtors-in-possession in accordance with the applicable provisions of the Bankruptcy Code and entered into (a) a $500 million priming superpriority senior secured debtors-in-possession term loan facility (the "DIP Term Loan," and such facility, the "DIP Term Loan Facility") and (b) an approximately $128 million priming superpriority senior secured debtors-in-possession asset-based loan facility (the "DIP ABL Loan," and such facility, the "DIP ABL Facility"). The DIP Term Loan and DIP ABL Loan converted into exit financing upon Avaya's Emergence. See Note 7, "Financing Arrangements".

Emergence from Voluntary Reorganization under Chapter 11 of the Bankruptcy Code

The Bankruptcy Court confirmed the Plan on March 22, 2023, and the Debtors satisfied all conditions required for Plan effectiveness and emerged from the Chapter 11 Cases ("Emergence") on May 1, 2023.

On or following the Emergence Date and pursuant to the terms of the Plan, the following occurred or became effective:

▪Debtors' Equity and Indebtedness. All of the Debtors' pre-petition equity and debt facilities as well as the Debtors' securities were canceled.

▪Reorganized Company Equity. The Company's certificate of incorporation was amended and restated to authorize the issuance of 80 million shares of the Company's common stock, par value $0.01 per share (the "New Common Stock"), of which 36 million shares were issued on the Emergence Date. The Company's certificate of incorporation was also amended and restated to authorize the issuance of 20 million shares of the Company's preferred stock, par value $0.01 per share (the "New Preferred Stock"), of which no shares were issued on the Emergence Date.

▪Exit Financing. The DIP Term Loan converted into an Exit Term Loan (as defined herein) and the Company incurred an additional $310 million under the Exit Term Loan Facility (including amounts incurred pursuant to a rights offering and amounts deemed incurred pursuant to the Plan by creditors under the Pre-Petition Debt Instruments) for an aggregate principal amount of $810 million, and the DIP ABL Loan converted into an Exit ABL Loan (as defined

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herein) in the amount of approximately $128 million. As contemplated in the bankruptcy court proceedings and approved by the court, the imputed enterprise value of the Company upon Emergence was approximately $1,426 million.

▪Contracts with Customers and Suppliers. Suppliers and customers were paid or will be paid in full in respect of pre-petition amounts owed by the Company, and the Company assumed the Amended and Restated RingCentral Agreements (as defined within Note 18, "Commitments and Contingencies") (which agreements were entered into immediately prior to, and in connection with, the execution of the RSA).

▪PBGC Settlement. The Company entered into a settlement with the Pension Benefit Guaranty Corporation (the "PBGC") providing for the assumption of the hourly pension plan and the consensual termination of the settlement with the PBGC entered into as part of the Company's 2017 plan of reorganization, including the excess contribution obligations thereunder.

▪Settlements. The Company entered into a number of other settlements, including, inter alia, those with the Consenting Stakeholders and an ad hoc group of holders of the Convertible Notes, and all of these settlements became effective on the Emergence Date.

Adoption of Accounting Standards Codification ("ASC") Topic 852

On the Emergence Date, the Company may qualify for and adopt fresh start accounting in accordance with Financial Accounting Standards Board Codification Topic 852, Reorganizations ("ASC 852"), which specifies the accounting and financial reporting requirements for entities reorganizing through Chapter 11 bankruptcy proceedings. The application of fresh start accounting would result in a new basis of accounting and the Company would become a new entity for financial reporting purposes. As a result of the implementation of the Plan and the potential application of fresh start accounting, the Consolidated Financial Statements after the Emergence Date would not be comparable to the Consolidated Financial Statements before that date, and the historical financial statements on or before the Emergence Date would not be a reliable indicator of its financial condition and results of operations for any period after the Company's adoption of fresh start accounting.

Liquidity and Going Concern

The accompanying unaudited Condensed Consolidated Financial Statements of the Company have been prepared assuming the Company will continue as a going concern and in accordance with GAAP. The going concern basis of presentation assumes that the Company will continue in operation one year after the date these Condensed Consolidated Financial Statements are issued and will be able to realize its assets and discharge its liabilities and commitments in the normal course of business.

During the fiscal year ended September 30, 2022, the Company experienced a significant slowdown in its operations and had operating cash outflows of $312 million. Additionally, prior to the Chapter 11 Cases, the Company had been involved in discussions with its lenders relating to the financing transactions it completed in July 2022 (as described further in Note 7, "Financing Arrangements") and the scheduled June 2023 maturity of the Convertible Notes. In its Form 12b-25 in respect of the Quarterly Report on Form 10-Q for the period ended June 30, 2022 filed with the SEC on August 9, 2022, the Company indicated that in light of the Convertible Notes being characterized as a current liability and the related engagement with advisors to address the Convertible Notes, coupled with the decline in revenues during the third quarter, which represented substantially lower revenues than previous Company expectations, and the negative impact of significant operating losses on the Company's cash balance, the Company determined that there was substantial doubt about the Company's ability to continue as a going concern.

The Company has completed certain restructuring actions and is working to complete its remaining restructuring plan as its operating cash flows are expected to remain negative through at least fiscal 2023. The Company may take additional actions, as needed. The Company’s plans are designed to reduce its operating expenses and improve cash flows in line with its forecasted revenues. On the Emergence Date, the Company had approximately $585 million of cash and cash equivalents, and its post-Emergence debt profile was significantly improved (an aggregate principal amount of $810 million compared to $3,420 million at December 31, 2022), reducing its annual interest expense and extending the earliest maturity of its non-revolving long-term debt to 2028. This post-Emergence capital structure, coupled with restructuring actions that the Company executed to reduce its on-going operating expenses, have provided the Company with sufficient working capital to meet its operating cash flow requirements for at least one year from the issuance of these financial statements. Accordingly, as a result of the successful Emergence, the Company has alleviated the substantial doubt that had previously existed regarding the Company's ability to continue as a going concern. The Company's longer term liquidity profile will depend on successfully implementing its strategic plan which includes enhancing its product offerings, successfully partnering with alliance companies and executing on remaining cost reductions.

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2. Recent Accounting Pronouncements

Recently Adopted Accounting Pronouncements

In August 2020, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 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. The Company adopted the standard on a modified retrospective basis effective October 1, 2022.

Upon adoption, the Company recorded a cumulative effect adjustment which decreased the opening balance of Accumulated deficit on the Condensed Consolidated Balance Sheet by $47 million, decreased Additional paid-in-capital by $118 million and increased Debt maturing within one year and Long-term debt by $10 million and $61 million, respectively, to eliminate the historical separation of debt and equity components of the Company's convertible or exchangeable debt instruments.

Recent Standards Not Yet Adopted

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): "Facilitation of the Effects of Reference Rate Reform on Financial Reporting". This standard, along with other guidance subsequently issued by the FASB, contains practical expedients for reference rate reform related activities that impact debt, derivatives and other contracts. The guidance in this standard is optional and may be elected at any time as reference rate reform activities occur. The standard may be applied prospectively to contract modifications made and hedging relationships entered into or evaluated on or before December 31, 2024. The Company intends to use the expedients, if needed, for the reference rate transition. The Company continues to monitor activities related to reference rate reform and does not currently expect this standard to have a material impact on the Company's 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 standard is effective for the Company in the first quarter of fiscal 2024, with early adoption permitted. The impact of this standard will depend on the nature of future transactions within its scope.

In March 2022, the FASB issued ASU 2022-02, "Financial Instruments – Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures." This standard requires an entity to disclose current-period gross write-offs by year of origination for financing receivables and net investment in leases measured at amortized cost. The standard also eliminates the existing troubled debt restructuring recognition and measurement guidance and, instead, requires an entity to evaluate whether the modification represents a new loan or a continuation of an existing loan in a manner consistent with other loan modifications. This 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.

In September 2022, the FASB issued ASU 2022-04, "Liabilities—Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations." This standard requires that a buyer in a supplier finance program disclose sufficient information about the program to allow a user of financial statements to understand the program’s nature, activity during the period, changes from period to period, and potential magnitude. The amendments in this standard do not affect the recognition, measurement, or financial statement presentation of obligations covered by supplier finance programs. The standard is effective for the Company in the first quarter of fiscal 2024, with early adoption permitted. Certain disclosures required by the standard are effective in the first quarter of fiscal 2025. The Company is currently assessing the impact the new guidance will have on its disclosures within its Condensed Consolidated Financial Statements.

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3. Contracts with Customers

Disaggregation of Revenue

The following tables provide the Company's disaggregated revenue for the periods presented:

	Three months endedMarch 31,				Six months endedMarch 31,
	Three months endedDecember 31,
(In millions)	2022		2021		~~2022~~		~~2021~~
Revenue:
Products & Solutions	$	~~223~~136	$	~~226~~231	$	~~454~~	$	~~492~~
Services	~~493~~282		~~513~~482		~~975~~		~~990~~
Unallocated Amounts	—		(1)		—		(1)
Total Revenue	$	418	$	713
Total Revenue	$	716	$	738	$	1,429	$	1,481

	Three months ended March 31, 2022				Three months ended March 31, 2021
	Three months ended December 31, 2022				Three months ended December 31, 2021
(In millions)	Products & Solutions		Services		Total		Products & Solutions		Services		~~Unallocated~~		Total
Revenue:
U.S.	$	~~130~~62	$	~~292~~146	$	~~422~~208	$	~~102~~114	$	~~311~~261	$	—	$	~~413~~375
International:
Europe, Middle East and Africa	5538		~~120~~71		~~175~~109		7365		~~115~~127		~~(1)~~		~~187~~192
Asia Pacific	2119		4637		6756		3032		4749		—		7781
Americas International - Canada and Latin America	17		3528		5245		2120		4045		—		6165
Total International	9374		~~201~~136		~~294~~210		~~124~~117		~~202~~221		~~(1)~~		~~325~~338
Total Revenue	$	~~223~~136	$	~~493~~282	$	~~716~~418	$	~~226~~231	$	~~513~~482	$	~~(1)~~	$	~~738~~713

	Six months ended March 31, 2022				Six months ended March 31, 2021
(In millions)	Products & Solutions		Services		Total		Products & Solutions		Services		Unallocated		Total
Revenue:
U.S.	$	244	$	553	$	797	$	228	$	599	$	—	$	827
International:
Europe, Middle East and Africa	120		247		367		165		218		(1)		382
Asia Pacific	53		95		148		59		93		—		152
Americas International - Canada and Latin America	37		80		117		40		80		—		120
Total International	210		422		632		264		391		(1)		654
Total Revenue	$	454	$	975	$	1,429	$	492	$	990	$	(1)	$	1,481

Unallocated amounts represent the fair value adjustment to deferred revenue recognized upon the Company's emergence from bankruptcy in December 2017 and excluded from segment revenue.

Transaction Price Allocated to the Remaining Performance Obligations

The transaction price allocated to remaining performance obligations that were wholly or partially unsatisfied as of ~~March~~December 31, 2022 was $~~2.3~~1,920 ~~billion~~million, of which 52% and 2526% 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)	~~March~~December 31, 2022		September 30, ~~2021~~2022		Increase (Decrease)
Accounts receivable, net	$	~~315~~302	$	~~307~~322	$	8(20)
Contract assets, net:
Current	$	~~640~~505	$	~~518~~543	$	~~122~~(38)
Non-current (Other assets)	~~131~~127		88134		43(7)
	$	~~771~~632	$	~~606~~677	$	~~165~~(45)
Cost of obtaining a contract:
Current (Contract costs)	$	8878	$	8981	$	(13)
Non-current (Other assets)	5440		5346		1(6)
	$	~~142~~118	$	~~142~~127	$	—(9)
Cost to fulfill a contract:
Current (Contract costs)	$	2726	$	2829	$	(13)
Contract liabilities:
Current	$	~~315~~255	$	~~360~~245	$	~~(45)~~10
Non-current	~~309~~287		~~305~~300		4(13)
	$	~~624~~542	$	~~665~~545	$	(413)

The ~~increase~~decrease in Contract assets was mainly driven by ~~growth~~billings which outpaced bookings in the Company's subscription offerings during the quarter. The decrease in contract costs was driven by lower sales and continued shift to 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 lower revenue earned from the consideration advance received in connection with the strategic partnership with RingCentral, Inc. ~~("RingCentral")~~. ~~During the three and six months ended March 31, 2022 and 2021, the Company did not record any asset impairment charges related to contract assets.~~

During the ~~six~~three months ended ~~March~~December 31, 2022 and 2021, the Company ~~recognized~~did revenue of $321 million and $402 million that had been previously recorded as a Contract liability as of October 1, 2021 and October 1, 2020, respectively. During the three months ended March 31, 2022, adjustments for performance obligations that were satisfied, or partially satisfied, in prior periods were not ~~material.~~record ~~During~~any ~~the~~asset ~~three~~impairment ~~months~~charges ~~ended~~related ~~March 31, 2021, the Company recognized a decrease~~ to ~~revenue~~contract ~~of $1 million, for performance obligations that were satisfied, or partially satisfied, in prior periods~~assets. During the six months ended March 31, 2022, the Company recognized a decrease to revenue of $2 million, for performance obligations that were satisfied, or partially satisfied, in prior periods. During the six months ended March 31, 2021, adjustments for performance obligations that were satisfied or partially satisfied, in prior periods were not material.

During the three months ended December 31, 2022 and 2021, the Company recognized revenue of $109 million and $162 million that had been previously recorded as a Contract ~~Costs~~liability as of October 1, 2022 and October 1, 2021, respectively.

~~The~~During ~~following~~the ~~table~~three ~~provides~~months ~~information~~ended ~~regarding~~December ~~the~~31, ~~location~~2022 and ~~amount~~2021, ~~for~~the ~~amortization~~Company ofrecognized ~~costs~~a todecrease ~~obtain~~in ~~and~~revenue ~~costs~~of to$4 ~~fulfill~~million ~~customer~~and ~~contracts~~$2 ~~recognized~~million, inrespectively, ~~the~~for ~~Company's~~performance ~~Condensed~~obligations ~~Consolidated~~that ~~Statements~~were ofsatisfied, ~~Operations~~or ~~for~~partially ~~the~~satisfied, ~~periods~~in prior periods.

9As disclosed in Note 19, "Subsequent Events,” the Company and RingCentral agreed to amend their agreement.

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	Three months endedMarch 31,				Six months endedMarch 31,
(In millions)	2022		2021		2022		2021
Costs to obtain customer contracts:
Selling, general and administrative	$	36	$	48	$	80	$	91
Revenue	6		3		10		4
Total Amortization	$	42	$	51	$	90	$	95
Costs to fulfill customer contracts:
Costs	$	7	$	10	$	15	$	14

Contract Costs

The following table provides information regarding the location and amount for amortization of costs to obtain and costs to fulfill customer contracts recognized in the Company's Condensed Consolidated Statements of Operations for the periods presented:


	Three months ended December 31,
(In millions)	2022		2021
Costs to obtain customer contracts:
Selling, general and administrative	$	37	$	44
Revenue	2		4
Total Amortization	$	39	$	48

Costs to fulfill customer contracts:
Costs	$	3	$	8

Allowance for Credit Losses

The following table presents the change in the allowance for credit losses by portfolio segment for the period indicated:

(In millions)	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
Allowance for credit loss as of September 30, 2022	$	5	$	1	$	2	$	8
Adjustment to credit loss provision	1—		—		—(1)		(1)
Allowance for credit loss as of March 31, 2022	$	5	$	1	$	1	$	7
Write-offs, net of recoveries	—		—		—		—
Allowance for credit loss as of December 31, 2022	$	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.

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4. ~~Goodwill and~~ Intangible Assets, net

The Company's intangible assets consist of the following for the periods indicated:

Goodwill


(In millions)	Technology and Patents		Customer Relationships and Other Intangibles		Trademarks and Trade Names		Total
Balance as of December 31, 2022
Finite-lived intangible assets:
Cost	$	966	$	2,149	$	42	$	3,157
Accumulated amortization	(834)		(781)		(25)		(1,640)
Finite-lived intangible assets, net	132		1,368		17		1,517
Indefinite-lived intangible assets:
Cost	—		—		333		333
Accumulated impairment	—		—		(155)		(155)
Indefinite-lived intangible assets, net	—		—		178		178
Intangible assets, net	$	132	$	1,368	$	195	$	1,695
Balance as of September 30, 2022
Finite-lived intangible assets:
Cost	$	964	$	2,146	$	42	$	3,152
Accumulated amortization	(797)		(741)		(25)		(1,563)
Finite-lived intangible assets, net	167		1,405		17		1,589
Indefinite-lived intangible assets:
Cost	—		—		333		333
Accumulated impairment	—		—		(146)		(146)
Indefinite-lived intangible assets, net	—		—		187		187
Intangible assets, net	$	167	$	1,405	$	204	$	1,776

~~Goodwill~~Intangible isassets ~~not~~with finite lives are amortized ~~but~~using isthe ~~subject~~straight-line tomethod ~~periodic~~over ~~testing~~the estimated economic lives of the assets. Intangible assets with finite lives are reviewed for impairment inwhenever ~~accordance~~events ~~with~~or ~~GAAP~~changes atin circumstances indicate that the ~~reporting~~carrying ~~unit~~amount ~~level~~of such assets may not be recoverable. ~~The~~Intangible ~~Company's~~assets ~~reporting~~determined ~~units~~to have indefinite useful lives are not amortized but are subject to impairment testing annually, on July 1st, or more frequently if events occur or circumstances change that ~~would~~indicate ~~more~~an ~~likely~~asset ~~than~~may ~~not~~be ~~reduce the fair value of a reporting unit below its carrying amount~~impaired.

~~The~~As announced in a Form 8-K dated December 13, 2022, the Company ~~determined~~was ~~that~~unable noto ~~events~~reach ~~occurred~~an orout-of-court ~~circumstances~~resolution ~~changed~~with ~~during~~certain holders of the ~~six~~Convertible ~~months~~Notes, ~~ended~~Senior ~~March~~Notes, 31Exchangeable Notes, ~~2022~~and ~~that~~the ~~would~~Term ~~indicate~~Loans ~~that~~outstanding itunder isthe Term Loan Credit Agreement, regarding one or more ~~likely~~potential ~~than~~financings, ~~not~~refinancings, ~~that~~recapitalizations, ~~its~~reorganizations, ~~goodwill~~restructurings, ~~was~~or ~~impaired~~investment transactions involving the Company. ToAs a result, the ~~extent~~Company ~~that~~revised ~~business~~its ~~conditions~~outlook ~~deteriorate~~to orreflect ifthe ~~changes~~increased inlikelihood ~~key~~of ~~assumptions~~a solvency event. The Company concluded that a triggering event had occurred and ~~estimates~~performed ~~differ~~an ~~significantly~~interim ~~from~~quantitative ~~management's~~impairment ~~expectations~~test for its indefinite-lived intangible asset, itthe ~~may~~Avaya beTrade ~~necessary~~Name, as of December 31, 2022 to ~~record~~compare ~~impairment~~the ~~charges~~fair invalue of the ~~future~~Avaya Trade Name to its carrying amount.

~~Intangible~~The ~~Assets~~fair value of the Avaya Trade Name was estimated using the relief-from-royalty model, a form of the income approach. Under this methodology, the fair value of the trade name was estimated by applying a royalty rate to forecasted net revenues which was then discounted using a risk-adjusted rate of return on capital. The model relies on assumptions regarding revenue growth rates, royalty rate, discount rate and terminal growth rate. Revenue growth rates inherent in the forecast were based on input from internal and external market intelligence research sources that compare factors such as growth in global economies, regional industry trends and product evolutions. The royalty rate was determined using a set of observed market royalty rates. The discount rate the Company used represents the estimated weighted average cost of capital, which reflects the overall level of inherent risk and the rate of return an outside investor would expect to earn. To estimate royalty cash flows beyond the final year of its model, the Company used a terminal value approach. Under this approach, the Company applied a perpetuity growth assumption to determine the terminal value. The Company incorporated the present value of the resulting terminal value into its estimate of fair value. The result of the interim impairment test of the Avaya Trade Name as of December 31, 2022 indicated that the carrying amount of the Avaya Trade Name exceeded its estimated fair value primarily due to the updated outlook. As a result, the Company recorded an indefinite-lived intangible asset impairment charge of $9 million within the Impairment charges line item in the Condensed Consolidated Statements of Operations, representing the amount by which the carrying

(In millions)	Technologyand Patents		CustomerRelationshipsand OtherIntangibles		Trademarks and Trade Names		Total
Balance as of March 31, 2022
Finite-lived intangible assets:
Cost	$	971	$	2,153	$	42	$	3,166
Accumulated amortization	(732)		(666)		(23)		(1,421)
Finite-lived intangible assets, net	239		1,487		19		1,745
Indefinite-lived intangible assets	—		—		333		333
Intangible assets, net	$	239	$	1,487	$	352	$	2,078
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, net	315		1,566		21		1,902
Indefinite-lived intangible assets	—		—		333		333
Intangible assets, net	$	315	$	1,566	$	354	$	2,235

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 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.

The Company determined that no events occurred or circumstances changed during the six months ended March 31, 2022 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 asset, 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.

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amount of the Avaya Trade Name exceeded its fair value. As of December 31, 2022, the remaining carrying amount of the Avaya Trade Name was $178 million.

To the extent that business conditions deteriorate further or if changes in key assumptions and estimates differ significantly from management's expectations, it may be necessary to record additional impairment charges in the future.

5. Supplementary Financial Information

The following table presents a summary of other (expense) income, net for the periods indicated:

	Three months endedMarch 31,				Six months endedMarch 31,
	Three months endedDecember 31,
(In millions)	2022		2021		~~2022~~		~~2021~~
OTHER INCOME, NET
OTHER (EXPENSE) INCOME, NET
Interest income	$	14	$	1—	$	1	$	1
Foreign currency gains (losses), net	2		1		2		(1)
Foreign currency losses, net	(10)		—
Gain on post-retirement plan settlement	—		14		—		14
Other pension and post-retirement benefit credits, net	2		6
Other pension and post-retirement benefit credits, net	6		7		12		14
Change in fair value of 2017 Emergence Date Warrants	—		1
Change in fair value of emergence date warrants	7		(22)		8		(27)
Total other (expense) income, net	$	(4)	$	7
Sublease income	—		1		—		1
Other, net	1		(1)		1		(1)
Total other income, net	$	17	$	1	$	24	$	1

The following table presents supplemental cash flow information for the periods presented:

The gain on post-retirement plan settlement for the three and six months ended March 31, 2021 is further described in Note 11, "Benefit Obligations."


	Three months ended December 31,
(In millions)	2022		2021
OTHER PAYMENTS
Interest payments (excluding lease related interest)	$	55	$	33
Income tax payments	5		7

NON-CASH INVESTING ACTIVITIES
Increase (decrease) in Accounts payable for Capital expenditures	$	1	$	(2)
Acquisition of equipment under operating leases	1		7

	Three months endedMarch 31,				Six months endedMarch 31,
(In millions)	2022		2021		2022		2021
OTHER PAYMENTS
Interest payments	$	60	$	59	$	93	$	92
Income tax payments	6		6		13		9
NON-CASH INVESTING ACTIVITIES
Increase (Decrease) in Accounts payable for Capital expenditures	$	1	$	(1)	$	(1)	$	(2)
Acquisition of equipment under finance leases	4		4		4		6

During the three months ended December 31, 2022 and 2021, the Company made payments for operating lease liabilities of $12 million and $15 million, respectively, and made payments for finance lease liabilities of $3 million and $3 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:

During both the three months ended March 31, 2022 and 2021, the Company made payments for operating lease liabilities of $16 million, and recorded non-cash additions for operating lease right-of-use assets of $4 million and $5 million, respectively. During the six months ended March 31, 2022 and 2021, the Company made payments for operating lease liabilities of $31 million and $33 million, respectively, and recorded non-cash additions for operating lease right-of-use assets of $11 million and $16 million, respectively.


(In millions)	December 31, 2022		September 30, 2022		December 31, 2021		September 30, 2021
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH
Cash and cash equivalents	$	225	$	253	$	354	$	498
Restricted cash	223		222		—		—
Restricted cash included in other assets	4		3		4		4
Total cash, cash equivalents, and restricted cash	$	452	$	478	$	358	$	502

(In millions)	March 31, 2022		September 30, 2021		March 31, 2021		September 30, 2020
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH
Cash and cash equivalents	$	324	$	498	$	593	$	727
Restricted cash included in other assets	4		4		4		4
Total cash, cash equivalents, and restricted cash	$	328	$	502	$	597	$	731

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6. Business Restructuring Reserves and Programs

The following table summarizes the restructuring charges by activity for the periods presented:

	Three months endedMarch 31,				Six months endedMarch 31,
	Three months endedDecember 31,
(In millions)	2022		2021		~~2022~~		~~2021~~
Employee separation costs	$	28	$	12	$	4	$	2
Facility exit costs	12		75		6		10
Total restructuring charges	$	310	$	87	$	10	$	12

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The Company's employee separation costs generally consist of severance charges which include, but are not limited to, termination payments, pension fund payments, health care and unemployment insurance costs to be paid to, or on behalf of, the affected employees and other associated costs. 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 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 three months ended December 31, 2022:

(In millions)	Fiscal ~~2022~~2023 Restructuring Program(1)		Fiscal ~~2021~~2022 Restructuring Program(21)		Fiscal ~~2020~~2021 and prior Restructuring Programs(2)		Total
Accrual balance as of September 30, 2021	$	—	$	14	$	30	$	44
Accrual balance as of September 30, 2022	$	—	$	26	$	23	$	49
Cash payments	(3)		(2)		(7)		(12)
Restructuring charges	8		—		—		8
Restructuring charges	4		—		—		4
Cash payments	(2)		(11)		(3)		(16)
Impact of foreign currency fluctuations	1—		~~(1)~~2		~~(1)~~2		~~(1)~~4
Accrual balance as of March 31, 2022	$	2	$	11	$	22	$	35
Accrual balance as of December 31, 2022	$	6	$	17	$	22	$	45

(1) Payments related to the fiscal 2023 and fiscal 2022 restructuring ~~program~~programs are expected to be completed in fiscal ~~2022~~2028.

(2) Payments related to the fiscal 2021 and ~~fiscal 2020 and~~ prior restructuring programs are expected to be completed in fiscal 2027.

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, 2022				September 30, 2021
	December 31, 2022				September 30, 2022
(In millions)	Principal amount		Net of discounts and issuance costs		Principal amount		Net of discounts and issuance costs
Senior 6.125% Notes due September 15, 2028	$	1,000	$	~~987~~988	$	1,000	$	~~986~~988
Tranche B-1 Term Loans due December 15, 2027	800		~~781~~784		800		~~780~~783
Tranche B-2 Term Loans due December 15, 2027	743		~~737~~738		743		~~736~~738
Convertible 2.25% Senior Notes due June 15, 2023	350		322		350		311
Tranche B-3 Term Loans due December 15, 2027	350		285		350		282
Total Long-term debt	$	2,893	$	2,827	$	2,893	$	2,813
Exchangeable 8.00% Senior Notes due December 15, 2027	250		231		250		169
Convertible 2.25% Senior Notes due June 15, 2023	221		220		221		210
ABL Credit Agreement due September 25, 2025	56		56		—		—
Total debt	$	3,420	$	3,302	$	3,364	$	3,170
Embedded derivatives liabilities	56		56		72		72
Debt maturing within one year	(3,476)		(3,358)		(221)		(210)
Long-term debt, net of current portion and derivatives	$	—	$	—	$	3,215	$	3,032

Term Loan and ABL Credit Agreements

As of ~~March~~December 31, 2022 and September 30, ~~2021~~2022, 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~~provided 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 subject to borrowing base availability (the "ABL Credit Agreement"). The ABL Credit Agreement matures on September 25, 2025.

Prior to ~~February~~July 2412, ~~2021~~2022, the Term Loan Credit Agreement matured in two tranches, with a principal ~~amount~~amounts of $~~843~~800 million (the "Tranche B-1 Term Loans") and $743 million (the "Tranche B-2 Term Loans") maturing on December 15, ~~2024~~2027. (On July 12, 2022, the ~~“Tranche~~Company Bamended the Term ~~Loans”~~Loan Credit Agreement ("Amendment No. 4"), ~~and~~pursuant ato which the Company incurred incremental term loans in an aggregate principal amount of $~~800~~350 million ~~maturing~~(the on"Tranche ~~December~~B-3 ~~15,~~Term ~~2027~~Loans"). ~~(the~~The “Tranche B-13 Term Loans” bear interest (a) in the case of alternative base rate ("ABR") Loans at rate per annum equal to 9.00% Onplus ~~February~~the ~~24,~~highest ~~2021,~~of (i) the ~~Company~~Federal ~~amended~~Funds Rate plus 0.50%, (ii) the ~~Term~~U.S. ~~Loan~~prime ~~Credit~~rate ~~Agreement~~as publicly announced in the Wall Street

1316

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~~("Amendment~~Journal ~~No.~~and 3"(iii), ~~pursuant to which~~ the ~~Company~~greater ~~prepaid,~~of ~~replaced~~(x) ~~and refinanced~~ the ~~Tranche~~adjusted BSecured ~~Term~~Overnight ~~Loans~~Financing ~~outstanding~~Rate ~~with~~("SOFR") ~~$100~~Rate ~~million~~for inan ~~cash~~interest ~~and~~period ~~$743 million in principal amount~~ of ~~new~~one ~~first~~month ~~lien~~plus ~~term~~1.00% ~~loans~~and ~~due December 2027~~ (~~the~~y) ~~“Tranche B-~~2.00% ~~Term~~and ~~Loans”~~(b). ~~The~~in ~~Tranche~~the ~~B-2~~case ~~Term~~of SOFR Loans, bear interest at a rate ~~with~~per ~~applicable~~annum ~~margin~~equal ofto 310.00% ~~per~~plus ~~annum~~the ~~with~~applicable ~~respect~~SOFR ~~to base~~ rate, ~~borrowings~~subject ~~and~~to 4a 1.00% ~~per annum with respect to LIBOR borrowings~~floor. Amendment No. 34 ~~was~~also ~~primarily~~made ~~accounted~~certain ~~for~~other aschanges ato ~~loan modification at~~ the ~~syndicated~~Term ~~lender~~Loan ~~level.~~Credit ~~Based~~Agreement onsolely for the ~~application~~benefit of the ~~loan~~lenders ~~modification~~providing ~~guidance within ASC 470,~~ the ~~Company~~Tranche ~~recorded $~~B-3 ~~million~~Term ofLoans, ~~new~~including ~~debt~~reducing ~~issuance~~flexibility ~~costs~~for ~~within~~the ~~Interest~~Company ~~expense~~to inincur ~~the~~additional ~~Condensed~~debt ~~Consolidated~~and ~~Statements~~liens ofor ~~Operations~~make ~~during~~restricted ~~the~~payments ~~three~~or ~~and~~investments ~~six~~under ~~months~~certain ~~ended~~of ~~March~~the ~~31,~~negative ~~2021~~covenants. ~~Loans~~The ~~from~~Company ~~lenders~~placed ~~who~~$221 ~~exited~~million ~~their~~of ~~positions~~the innet proceeds of the Tranche B-3 Term Loans asin aescrow. ~~result~~Filing of ~~Amendment~~the ~~No.~~Chapter 311 ~~were~~Cases ~~accounted~~triggered ~~for~~an asevent aof ~~loan~~default ~~extinguishment.~~under ~~Accordingly,~~ the ~~Company~~Term ~~wrote-off~~Loan aCredit ~~portion~~Agreement ofcausing the ~~original~~automatic ~~underwriting~~acceleration ~~discount~~ of $1all ~~million~~obligations ~~within~~thereunder, ~~Interest~~including ~~expense during~~ the ~~three~~Tranche ~~and~~B-3 ~~six~~Term ~~months ended March 31, 2021~~Loans.

~~For~~The ~~the~~Company ~~three~~evaluated ~~months~~Amendment ~~ended~~No. ~~March~~4 31in accordance with ASC 815, ~~2022~~Derivatives and ~~2021~~Hedging, and determined that there are embedded features in the ~~Company~~amendment ~~recognized~~that ~~interest~~are ~~expense~~not ofclearly ~~$17~~and ~~million~~closely related to the underlying debt instrument and ~~$22~~did ~~million,~~not ~~respectively~~qualify for any scope exceptions set forth in the accounting standards. Accordingly, ~~related~~these embedded features are required to ~~the~~be ~~Term~~bifurcated ~~Loan~~from ~~Credit~~their ~~Agreement~~host instrument and accounted for separately as an embedded derivative liability. As a result, ~~including~~the Company recorded the ~~amortization~~fair value of the ~~debt~~embedded ~~discount~~derivatives ~~and~~as of the issuance ~~costs~~date ~~and~~as a $30 million reduction of the ~~expenses~~initial ~~associated~~carrying ~~with~~amount ~~Amendment~~of ~~No.~~the Tranche B-3 ~~described~~Term ~~above.~~Loans ~~For~~(as part of the ~~six~~debt ~~months~~discount). ~~ended~~The ~~March~~discount ~~31,~~is ~~2022~~amortized ~~and~~to ~~2021,~~interest ~~the~~expense ~~Company~~using ~~recognized~~the effective interest ~~expense~~method over the life of ~~$35~~the ~~million~~Tranche ~~and~~B-3 ~~$42~~Term ~~million,~~Loans. ~~respectively,~~The ~~related~~embedded derivatives will be adjusted to fair value each reported period with changes in fair value subsequent to the ~~Term~~issuance ~~Loan~~date ~~Credit~~recognized ~~Agreement,~~within ~~including~~Interest Expense in the ~~amortization~~Condensed Consolidated Statements of ~~the~~Operations. ~~debt~~See ~~discount~~Note ~~and~~8, ~~issuance~~"Derivative ~~costs~~Instruments and Hedging Activities," for further information regarding the ~~expenses~~valuation ~~associated~~of ~~with~~the ~~Amendment~~embedded Noderivatives. 3The ~~described~~aggregate ~~above~~fair value of the embedded derivatives is reflected within Long-term debt in the Condensed Consolidated Balance Sheets.

AsFor ~~of March 31, 2022,~~ the ~~Company~~three ~~had~~months noended ~~borrowings~~December ~~outstanding~~31, ~~under~~2022 ~~the~~and ~~ABL Credit Agreement. Under the terms of the ABL Credit Agreement~~2021, the Company ~~can~~recognized ~~issue~~interest ~~letters~~expense of ~~credit~~$30 upmillion toand $~~150~~18 million~~. At March 31~~, ~~2022~~respectively, ~~the~~related ~~Company~~to ~~had~~the ~~issued~~Term ~~and~~Loan ~~outstanding~~Credit ~~letters~~Agreement, ofincluding ~~credit~~the ~~and~~amortization ~~guarantees~~ of ~~$32 million~~the ~~under~~underwriting ~~the~~discount ~~ABL~~and ~~Credit~~issuance ~~Agreement~~costs. The ~~aggregate~~three ~~additional~~months ~~principal~~ended ~~amount~~December ~~that may be borrowed under the ABL Credit Agreement~~31, ~~based~~2022 onincludes ~~the borrowing base less~~ $32 (17) million of ~~outstanding~~interest ~~letters~~expense ofrelated ~~credit~~to ~~and~~the ~~guarantees~~change ~~was~~in ~~$118 million~~the atfair ~~March 31,~~value ~~2022. For each~~ of the ~~three~~Tranche ~~and~~B-3 ~~six~~Term ~~months~~Loans ~~ended~~embedded ~~March~~derivatives ~~31,~~during ~~2022 and 2021, recognized interest expense related to~~ the ~~ABL Credit Agreement was not material~~period.

As of December 31, 2022, the Company had an outstanding balance of $56 million under the ABL Credit Agreement, which includes borrowings of $90 million and repayments of $34 million made during the first quarter of fiscal 2023. The borrowing matures monthly and is renewable at the Company's election in accordance with the terms and conditions of the ABL Credit Agreement. As of December 31, 2022, the Company has the ability and intent to repay the ABL Credit Agreement balance within one year and has classified the balance as current. Under the terms of the ABL Credit Agreement, the Company can issue letters of credit up to $150 million. At December 31, 2022, the Company had issued and outstanding letters of credit and guarantees of $38 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 $38 million of outstanding borrowings, letters of credit and guarantees was $21 million at December 31, 2022. For the three months ended December 31, 2022, recognized interest expense related to the ABL Credit Agreement was $1 million. For the three months ended December 31, 2021, 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.

For ~~both~~each of the three months ended ~~March~~December 31, 2022 and 2021, the Company recognized interest expense of $16 million related to the Senior Notes, including the amortization of debt issuance costs. ~~For both the six months ended March 31, 2022 and 2021, the Company recognized interest expense of $32 million 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 of $350 million (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~~trustee.

~~For~~On ~~the~~July ~~three months ended March 31~~12, 2022 ~~and 2021~~, the Company ~~recognized~~repurchased ~~interest~~approximately ~~expense of~~ $8129 million ~~and~~principal $7amount ~~million~~of ~~related~~the toCompany's ~~the~~$350 million Convertible Notes, ~~respectively,~~due ~~which~~June ~~includes~~15, $62023. ~~million~~The ~~and~~repurchase $5was ~~million~~accounted offor ~~amortization~~as ofa ~~the~~loan ~~debt~~extinguishment. ~~discount~~Based ~~and~~on ~~issuance~~the ~~costs,~~application ~~respectively.~~of ~~For~~ the ~~six~~loan ~~months~~extinguishment ~~ended~~guidance ~~March~~within ~~31,~~ASC ~~2022 and 2021~~470, the Company ~~recognized~~recorded ~~interest~~a ~~expense of~~ $155 million ~~and~~gain ~~$14~~on ~~million~~extinguishment ~~related~~within toInterest expense in the ~~Convertible~~Consolidated ~~Notes,~~Statements ~~respectively,~~of ~~which~~Operations ~~includes~~during ~~$11~~fiscal ~~million~~2022. ~~and~~In ~~$10~~connection ~~million~~with ofthe ~~amortization~~repurchase, the Company terminated a portion of the ~~debt~~Bond ~~discount~~Hedge and ~~issuance~~Call ~~costs~~Spread Warrants, ~~respectively~~each representing 4.7 million of its common stock.

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For the three months ended December 31, 2022 and 2021, the Company recognized interest expense of $2 million and $7 million related to the Convertible Notes, which includes $0 million and $5 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)

~~March~~December 31, 2022

September 30, ~~2021~~2022

Principal

~~350~~221

Less:

Unamortized debt discount

~~(26)~~—

(3610)

Unamortized issuance costs

(21)

(31)

Net carrying amount

~~322~~220

~~311~~210

The ~~weighted~~net ~~average~~carrying ~~contractual~~amount ~~interest rate~~ of the ~~Company's~~equity ~~outstanding~~component ~~debt was 6.5% as~~ of ~~both~~the ~~March 31,~~Convertible ~~2022~~Notes ~~and~~for ~~September 30, 2021, including adjustments related to~~ the ~~Company's~~periods ~~interest~~indicated ~~rate~~was ~~swap~~as ~~agreements (see Note 8, "Derivative~~ follows:


(In millions)	December 31, 2022 (1)		September 30, 2022
Debt discount for conversion option	$	79	$	92
Less:
Conversion option retirement	—		(10)
Issuance costs	—		(3)
Adoption of ASU 2020-06	(56)		—
Net carrying amount	$	23	$	79

(1)Upon adoption of ASU 2020-06 on October 1, 2022, the Company recorded an adjustment to reclassify the debt discount for the conversion option and issuance costs associated with the equity component of the Convertible Notes. See Note 2, "Recent Accounting Pronouncements," for further information regarding the cumulative effect adjustment made by the Company upon adoption. The remaining equity component of the Convertible Notes is related to the $129 million of the Convertible Notes which were repurchased prior to the adoption of ASU 2020-06 as described above.

Exchangeable Notes

On July 12, 2022, the Company issued its 8.00% Exchangeable Senior Secured Notes due 2027 with an aggregate principal amount of $250 million (the "Exchangeable Notes"). The Exchangeable Notes were issued pursuant to an indenture by and among Avaya Inc., the guarantors party thereto and Wilmington Trust, National Association, as trustee, exchange agent and notes collateral agent.

The Company evaluated the indenture governing the Exchangeable Notes in accordance with ASC 815, Derivatives and Hedging, and determined that there are embedded features in the indenture that are not clearly and closely related to the underlying debt instrument and did not qualify for any scope exceptions set forth in the accounting standards. Accordingly, these embedded features are required to be bifurcated from their host instrument and accounted for separately as an embedded derivative liability. As a result, the Company recorded the fair value of the embedded derivatives as of the issuance date as a $4 million reduction of the initial carrying amount of the Exchangeable Notes (as part of the debt discount). The discount is amortized to interest expense using the effective interest method over the life of the Exchangeable Notes. The embedded derivatives will be adjusted to fair value each reported period with changes in fair value subsequent to the issuance date recognized within Interest Expense in the Condensed Consolidated Statements of Operations. See Note 8, "Derivative Instruments and Hedging Activities," for further information regarding the valuation of the embedded derivatives. The aggregate fair value of the embedded derivatives is reflected within Long-term debt in the Condensed Consolidated Balance Sheets.

For the three months ended December 31, 2022, the Company recognized interest expense of $7 million related to the Exchangeable Notes, which includes $1 million of amortization of the debt issuance costs, and $1 million related to the change in the fair value of the Exchangeable Notes embedded derivatives during the period.

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~~Instruments and Hedging Activities").~~ The ~~effective~~net ~~interest~~carrying ~~rate~~amount ~~for the Term Loan Credit Agreement as~~ of March 31, 2022 and September 30, 2021 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~~Exchangeable Notes ~~as of March 31, 2022 and September 30, 2021 was not materially different than its contractual interest rate. The effective interest rate~~ for the ~~Convertible~~periods ~~Notes~~indicated ~~as of both March 31, 2022 and September 30, 2021~~ was ~~9.2%,~~as ~~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.~~follows:

As of March 31, 2022, the Company was not in default under any of its debt agreements.


(In millions)	December 31, 2022		September 30, 2022
Principal	$	250	$	250
Less:
Unamortized debt discount	—		(65)
Unamortized issuance costs	(15)		(12)
Unamortized debt discount - Embedded derivative liability	(4)		(4)
Net carrying amount	$	231	$	169

The net carrying amount of the equity component of the Exchangeable Notes for the period indicated was as follows:


(In millions)	December 31, 2022 (1)		September 30, 2022
Debt discount for conversion option	$	62	$	66
Less:
Issuance costs	—		(4)
Adoption of ASU 2020-06	(62)		—
Net carrying amount	$	—	$	62

(1)Upon adoption of ASU 2020-06 on October 1, 2022, The Company recorded an adjustment to reclassify the debt discount for the conversion option and issuance costs associated with the equity component of the Exchangeable Notes. See Note 2, "Recent Accounting Pronouncements," for further information regarding the cumulative effect adjustment made by the Company upon adoption.

The weighted average contractual interest rate of the Company's outstanding debt was 8.0% as of December 31, 2022 and 7.4% as of September 30, 2022, 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 was 10.7% as of December 31, 2022 and 9.0% as of September 30, 2022. The effective interest rate for the Senior Notes as of December 31, 2022 and September 30, 2022 was not materially different than its contractual interest rate. The effective interest rate for the Convertible Notes was 2.8% as of December 31, 2022, reflecting adjustment to the conversion feature in equity upon adoption of ASU 2020-06. The effective interest rate for the Convertible Notes was 9.2% as of September 30, 2022, reflecting the separation of the conversion feature in equity. The effective interest rate for the Exchangeable Notes was 9.9% as of December 31, 2022, reflecting adjustment to the conversion feature in equity upon adoption of ASU 2020-06. The effective interest rate for the Exchangeable Notes was 17.7% as of September 30, 2022, 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.

On December 29, 2022, the Company provided Notices of Default to the administrative agents of the Term Loan Credit Agreement and ABL Credit Agreement; and the trustees of the Senior Notes, Convertible Notes and Exchangeable Notes due to the Company's failure to timely deliver financial statements for the nine months ended June 30, 2022 and the fiscal year ended September 30, 2022. It is not probable that the violation will be cured during the grace period and therefore, in accordance with the terms of the credit agreements, the debt is deemed callable and has been classified as a current liability on the Condensed Consolidated Balance Sheet as of December 31, 2022. As noted in Note 1, "Background and Basis of Presentation," all of the Debtors' pre-petition equity and debt facilities as well as the Debtors' securities were extinguished upon Emergence.

Debtor in Possession Financing

On the Petition Date, the Debtors entered into the DIP Term Loan Facility. On February 24, 2023, the Debtors entered into the DIP ABL Facility. The Bankruptcy Court provided final approval for both facilities on March 7, 2023.

The filing of the Chapter 11 Cases constituted an event of default under the ABL Credit Agreement, the Term Loan Credit Agreement, the Senior Notes, the Convertible Notes and the Exchangeable Notes, that accelerated and, as applicable, increased certain obligations thereunder.

Reorganized Company Financing

On the Emergence Date, the DIP Term Loan converted on a dollar-for-dollar basis into a term loan under a senior secured exit term loan facility and the Company incurred an additional $310 million under the facility (including amounts incurred pursuant to a rights offering) for an aggregate principal amount of $810 million (the "Exit Term Loan", such facility, the "Exit Term Loan Facility", and the agreement providing for such facility, the "Exit Term Loan Credit Agreement") and the DIP ABL Facility converted on a dollar-for-dollar basis into a senior secured exit asset-based revolving loan facility (the "Exit ABL Loan", such facility, the "Exit ABL Loan Facility", and the agreement providing for such facility, the "Exit ABL Credit Agreement"). The Exit Term Loan bears interest at a rate equal to (1) Term SOFR plus (i) 7.50% to the extent interest is paid

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entirely in cash or (ii) 8.50% to the extent interest is paid with a combination of cash and payment in kind (consisting of 1.50% payable in cash and 7.00% paid in kind) or (1) Base Rate plus (i) 6.50% to the extent interest is paid entirely in cash or (ii) 7.50% to the extent interest is paid with a combination of cash and payment in kind (consisting of 1.00% payable in cash and 6.50% paid in kind), subject to a 1.00% floor and matures on August 1, 2028. The Company has the option to pay interest with a combination of cash and payment-in-kind for interest payment dates through, and including, June 30, 2024. For interest payments dates after June 30, 2024, interest is payable in cash. The Exit ABL Loan bears interest at a rate equal to Term SOFR plus 3.00% or Base Rate plus 2.00% and matures on May 1, 2026.

The Exit Term Loan Credit Agreement and the Exit ABL Credit Agreement each include conditions precedent, representations and warranties, affirmative and negative covenants, and events of default customary for financings of this type and size. The Borrower's obligations under the Exit Term Loan Credit Agreement and the Exit ABL Credit Agreement are guaranteed by the Company and are collectively secured by a security interest in, and a lien on, substantially all property (subject to certain exceptions) of the Company. The Exit Term Loan Credit Agreement and the Exit ABL Credit Agreement also contain customary covenants that limit the ability of the Company to, among other things, (1) incur additional indebtedness and permit liens to exist on their assets, (2) pay dividends or make certain other restricted payments, (3) sell assets or (4) make certain investments. These covenants are subject to exceptions and qualifications as set forth in each of the Exit Term Loan Credit Agreement and the Exit ABL Credit Agreement.

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 six counterparties, which ~~fix~~fixed 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~~matured on December 15, 2022, the Company ~~pays~~paid a fixed rate of 2.935% and ~~receives~~received 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~~matured on December 15, 2022, the Company ~~pays~~paid a variable rate of interest based on one-month LIBOR and ~~receives~~received a fixed rate of 0.1745%. The Company 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. AsThrough ofJune ~~March 31~~30, 2022, Original Swap Agreements with a notional amount of $1,543 million ~~continue~~were ~~to be~~ designated as cash flow hedges and deemed highly effective as defined under ASC 815. On June 30, 2022, the Company determined that the hedged transactions were no longer highly probable of occurring as forecasted, and as such, the Company de-designated the remaining Original Swap Agreements from hedge accounting treatment.

On July 1, 2020, the Company entered into interest rate swap agreements with four counterparties, which fixed a portion of the variable interest due under 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 would pay a fixed rate of 0.7047% and receive a variable rate of interest based on one-month LIBOR. The total notional amount of the Forward Swap Agreements was $1,400 million. ~~Since~~Through ~~their~~March ~~execution~~23, 2022, the Forward Swap Agreements were designated as cash flow hedges and deemed highly effective as defined by ASC 815.

On March 23, 2022, the Company restructured its Forward Swap Agreements resulting in the receipt of $52 million of net cash proceeds which is reflected within cash used for operating activities in the Condensed Consolidated Statements of Cash Flows for the six months ended March 31, 2022. As part of the restructuring, the Company terminated the Forward Swap Agreements and simultaneously entered into new interest rate swap agreements with four counterparties (the "New Forward Swap Agreements"), which resulted in the receipt of $52 million cash proceeds. The New Forward Swap Agreements ~~fix~~fixed a portion of the variable interest due under the Company's Term Loan Credit Agreement from December 15, 2022 through June 15, 2027. Under the terms of the New Forward Swap Agreements, the Company ~~will~~paid ~~pay~~ a fixed rate of 2.5480% and ~~receive~~received a variable rate of interest based on one-month SOFR. The ~~Company's intends to transition its Term Loan Credit Agreement from one-month LIBOR to one-month SOFR effective December 15, 2022. The~~ total notional amount of the New Forward Swap Agreements is $1,000 million. ~~The~~Through June 30, 2022, the New Forward Swap Agreements were designated as cash flow hedges and deemed highly effective as defined by ASC 815. On June 30, 2022, the Company determined that the hedged transactions were no longer highly probable of occurring as forecasted, and as such, the Company de-designated the New Forward Swap Agreements from hedge accounting treatment.

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 related to the de-designated Original Swap Agreements, which is reclassified to Interest expense over the term of the Original Swap Agreements. On March 23, 2022, the Company froze a $52 million deferred gain within Accumulated other comprehensive loss related to the termination of the Forward Swap Agreements, which will be reclassified to Interest expense over the term of the original Forward Swap Agreements. 20

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~~Based~~The Company records changes in the fair value of interest rate swap agreements designated as cash flow hedges initially within Accumulated other comprehensive income (loss) in the Condensed Consolidated Balance Sheets. As interest expense is recognized on the ~~amount~~Term Loan Credit Agreement, the corresponding deferred gain or loss on the cash flow hedge is reclassified from Accumulated other comprehensive income (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 income (loss) atrelated to the de-designated Original Swap Agreements, which was reclassified to Interest expense over the term of the Original Swap Agreements. On March 31 23, 2022, ~~approximately~~the Company froze a $1352 million ~~would~~deferred begain within Accumulated other comprehensive income (loss) related to the termination of the Forward Swap Agreements, which was reclassified to Interest expense inover the ~~next~~term ~~twelve~~of ~~months~~the original Forward Swap Agreements. On June 30, 2022, the Company froze a $9 million deferred gain within Accumulated other comprehensive income (loss) related to the de-designation of the Original Swap Agreements and New Forward Swap Agreements, which was reclassified to Interest expense over the term of the respective swap agreements.

In December 2022, the Company concluded that the hedged forecasted transactions related to the interest rate swap agreements are probable of not occurring as a result of the Company's inability to reach an out of court solution regarding potential financings, refinancings, recapitalizations, reorganizations, restructurings or investment transactions involving the Company and certain debt holders. As a result, frozen deferred gains of $63 million related to the Company's interest rate swap agreements were reclassified to Interest expense during the first quarter of fiscal 2023. The Company later terminated its New Forward Swap Agreements resulting in the receipt of $40 million of net cash proceeds which is reflected within cash used for operating activities in the Condensed Consolidated Statements of Cash Flows for the three months ended December 31, 2022.

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.

Debt-Related Embedded Derivatives

The Company's Tranche B-3 Term Loans and Exchangeable Notes contain embedded features that, in certain scenarios, could modify the cash flows of their respective debt instruments. These embedded features (the "Debt-related embedded derivatives") are required to be bifurcated from their host contracts and accounted for as an embedded derivative. The Debt-related embedded derivatives are recorded at fair value with changes in fair value subsequent to the issuance date recorded in Interest expense in the Condensed Consolidated Statements of Operations.

On July 12, 2022, the issuance date, the aggregate fair value of the Debt-related embedded derivatives was $34 million, which was recorded as a debt discount (contra liability) and a derivative liability within Long-term debt on the Consolidated Balance Sheets. As of December 31, 2022 and September 30, 2022, the aggregate fair value of the Debt-related embedded derivatives was $56 million and $72 million, respectively.

The fair value of the derivatives is determined using the with-and-without model which compares the estimated fair value of the underlying debt instrument with the embedded features to the estimated fair value of the underlying debt instrument without the embedded features, with the difference representing the estimated fair value of the embedded derivative features. The with-and-without model includes significant unobservable estimates, including estimated market yield, an estimation of the Company’s probability of default and creditor recovery rates, and the probability of the occurrence of a change of control event or asset sale.

The fair value of the derivatives as of December 31, 2022 was determined using the market assumptions summarized below:


	December 31, 2022
Tranche B-3 Term Loans due December 15, 2027
Credit Spread	31.03	%
Risk-free interest rates	3.99	%
Exchangeable 8.00% Senior Secured Notes due 2027
Credit Spread	31.03	%
Risk-free interest rates	3.99	%
Implied volatility	273.31	%
Price per share of common stock	$0.20

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 March 31, 2022, the Company maintained open foreign currency forward contracts with a total notional value of $156 million, hedging the British Pound Sterling, Mexican Peso, Czech Koruna and Japanese Yen. As of September 30, 2021, the Company maintained open foreign currency forward contracts with a total notional value of $191 million, primarily hedging the British Pound Sterling, Indian Rupee, Czech Koruna and Mexican Peso.

~~Emergence Date Warrants~~ 21

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 March 31, 2022.

	March 31,2022		September 30, 2021
Expected volatility	62.41	%	49.63	%
Risk-free interest rates	1.29	%	0.13	%
Contractual remaining life (in years)	0.71		1.21
Price per share of common stock	$12.67		$19.79

In determining the fair value of the Emergence Date Warrants, the dividend yield was assumed to be zero as the Company does not anticipate paying dividends on its common stock throughout the term of the warrants.

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~~Financial~~contracts ~~Statement~~are ~~Information~~recorded ~~Related~~as a component of Other income, net to ~~Derivative~~offset ~~Instruments~~the change in the value of the hedged assets and liabilities. As of December 31, 2022, the Company had no open foreign currency forward contracts. As of September 30, 2022, the Company maintained open foreign currency forward contracts with a total notional value of $12 million, hedging the Czech Koruna.

		March 31, 2022				September 30, 2021
(In millions)	Balance Sheet Caption	Asset		Liability		Asset		Liability
Derivatives Designated as Hedging Instruments:
Interest rate contracts	Other assets	$	—	$	—	$	6	$	—
Interest rate contracts	Other current liabilities	—		17		—		43
Interest rate contracts	Other liabilities	—		4		—		10
		—		21		6		53
Derivatives Not Designated as Hedging Instruments:
Interest rate contracts	Other current liabilities	—		5		—		7
Interest rate contracts	Other liabilities	—		—		—		2
Foreign exchange contracts	Other current liabilities	—		1		—		2
Emergence Date Warrants	Other current liabilities	—		1		—		—
Emergence Date Warrants	Other liabilities	—		—		—		9
		—		7		—		20
Total derivative fair value		$	—	$	28	$	6	$	73

2017 Emergence Date Warrants

	Three months endedMarch 31,
	2022				2021
(In millions)	Interest Expense		Other Comprehensive Income		Interest Expense		Other Comprehensive Income
Financial Statement Line Item in which Cash Flow Hedges are Recorded	$	(54)	$	39	$	(59)	$	85
Impact of cash flow hedging relationships:
Gain recognized in AOCI on interest rate swaps	—		42		—		17
Interest expense reclassified from AOCI	(12)		12		(13)		13

In accordance with the bankruptcy plan of reorganization adopted in connection with the Company's emergence from bankruptcy on December 15, 2017 (the "2017 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 2017 Plan of Reorganization (the "2017 Emergence Date Warrants"). Each 2017 Emergence Date Warrant had an exercise price of $25.55 per share and expired on December 15, 2022. The 2017 Emergence Date Warrants contained certain derivative features that required 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 approved a warrant repurchase program, authorizing the Company to repurchase up to $15 million worth of the 2017 Emergence Date Warrants. None of the 2017 Emergence Date Warrants were exercised or repurchased.

The fair value of the 2017 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 2017 Emergence Date Warrants as of September 30, 2022 was determined using the input assumptions summarized below:

	Six months endedMarch 31,
	September 30, 2022 (1)
	2022					2021
Expected volatility	113.93		%
(In millions)	Interest Expense			Other Comprehensive Income		Interest Expense		Other Comprehensive Income
Risk-free interest rates	2.36		%
Financial Statement Line Item in which Cash Flow Hedges are Recorded	$	(108)		$	79	$	(115)	$	102
Contractual remaining life (in years)	0.46
Impact of cash flow hedging relationships:
Price per share of common stock	$2.24
Gain recognized in AOCI on interest rate swaps	—			57		—		16
Interest expense reclassified from AOCI	(25)			25		(25)		25

17(1)The Company qualitatively determined the fair value of the 2017 Emergence Date Warrants as of September 30, 2022 to be negligible as a result of the decline in Company's stock price since the most recent quantitative analysis (June 30, 2022) and the remaining contractual term of 0.21 years as of September 30, 2022. The amounts presented represent the input assumptions as of June 30, 2022.

In determining the fair value of the 2017 Emergence Date Warrants, the dividend yield was assumed to be zero as the Company did not anticipate paying dividends on its common stock throughout the term of the warrants.

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		Three months endedMarch 31,				Six months endedMarch 31,
(In millions)	Location of Derivative Pre-tax Gain (Loss)	2022		2021		2022		2021
Emergence Date Warrants	Other income, net	$	7	$	(22)	$	8	$	(27)
Foreign exchange contracts	Other income, net	(1)		1		(1)		6

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:

	March 31, 2022				September 30, 2021
			December 31, 2022				September 30, 2022
(In millions)	~~Asset~~Balance Sheet Caption		~~Liability~~Asset		~~Asset~~Liability		~~Liability~~Asset		Liability
Gross amounts recognized in the Condensed Consolidated Balance Sheets	$	—	$	28	$	6	$	73
Derivatives Not Designated as Hedging Instruments:
Gross amount subject to offset in master netting arrangements not offset in the Condensed Consolidated Balance Sheets	—		—		(6)		(6)
Interest rate contracts	Other current assets		$	—	$	—	$	15	$	—
Net amounts	$	—	$	28	$	—	$	67
Interest rate contracts	Other assets		—		—		40		—
Interest rate contracts	Other current liabilities		—		—		—		2
Debt-related embedded derivatives	Debt maturing within one year		—		56		—		—
Debt-related embedded derivatives	Long-term debt		—		—		—		72
			—		56		55		74
Total derivatives fair value			$	—	$	56	$	55	$	74

The following table provides information regarding the location and amount of pre-tax gains (losses) for interest rate contracts designated as cash flow hedges:


	Three months ended December 31,
	2022				2021
(In millions)	Interest Expense		Other Comprehensive Loss		Interest Expense		Other Comprehensive Income
Financial Statement Line Item in which Cash Flow Hedges are Recorded	$	(5)	$	(100)	$	(54)	$	40

Impact of cash flow hedging relationships:
Gain recognized in AOCI on interest rate swaps	—		—		—		15
Interest expense reclassified from AOCI	(62)		62		(13)		13

The following table provides information regarding the pre-tax (losses) gains for derivatives not designated as hedging instruments on the Condensed Consolidated Statements of Operations:


		Three months ended December 31,
(In millions)	Location of Derivative Pre-tax (Loss) Gain	2022		2021
Interest rate contracts	Interest expense	$	(13)	$	—
Debt-related embedded derivatives	Interest expense	(16)		—
2017 Emergence Date Warrants	Other income, net	—		1

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 the right to offset by counterparty per the master netting agreements:


	December 31, 2022				September 30, 2022
(In millions)	Asset		Liability		Asset		Liability
Gross amounts recognized in the Condensed Consolidated Balance Sheets	$	—	$	56	$	55	$	74
Gross amount subject to offset in master netting arrangements not offset in the Condensed Consolidated Balance Sheets	—		—		(2)		(2)
Net amounts	$	—	$	56	$	53	$	72

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 and accordingly, the estimates presented herein are not necessarily indicative of the amounts that the Company could realize in a current market exchange.

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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 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 December 31, 2022 and September 30, 2022 were as follows:

	March 31, 2022								September 30, 2021
	December 31, 2022								September 30, 2022
	Fair Value Measurements Using								Fair Value Measurements Using
(In millions)	Total		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3
Assets:
Interest rate contracts	$	—	$	—	$	—	$	—	$	655	$	—	$	655	$	—
Total assets	$	—	$	—	$	—	$	—	$	655	$	—	$	655	$	—
Liabilities:
Interest rate contracts	$	26—	$	—	$	26—	$	—	$	622	$	—	$	622	$	—
Foreign exchange contracts	1		—		1		—		2		—		2		—
Debt-related embedded derivatives	56		—		—		56		72		—		—		72
Emergence Date Warrants	1		—		—		1		9		—		—		9
Total liabilities	$	56	$	—	$	—	$	56	$	74	$	—	$	2	$	72
Total liabilities	$	28	$	—	$	27	$	1	$	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~~Debt-related ~~Date~~Embedded ~~Warrants~~Derivatives classified as Level 3 liabilities are valued using athe ~~probability weighted Black~~with-~~Scholes~~and-without ~~option pricing~~ model which is further described in Note 8, "Derivative Instruments and Hedging Activities."

~~During~~The ~~the~~following ~~three~~table ~~and~~provides ~~six~~changes ~~months~~to ~~ended~~those ~~March~~fair ~~31,~~value ~~2022~~measurements ~~and~~using ~~2021, there were no transfers into or out of~~ Level 3. ~~The~~inputs ~~activity~~for ~~related to~~ the ~~Company's~~three ~~Level~~months 3ended ~~liability,~~December ~~the Emergence Date Warrants~~31, ~~relates to a change in fair value which was recorded in Other income, net.~~2022:


	Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
(In millions)	Debt-Related Embedded Derivatives
Balance as of September 30, 2022	$	72
Change in fair value (1)	(16)
Balance as of December 31, 2022	$	56

(1)The change in fair value of the debt-related embedded derivatives was recorded in Interest expense.

During the three months ended December 31, 2022 and 2021, there were no transfers into or out of Level 3.

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Fair Value of Financial Instruments

The estimated fair values of the Senior Notes, Term Loans, Exchangeable Notes and Convertible Notes as of December 31, 2022 and September 30, 2022 were as follows:

	March 31, 2022				September 30, 2021
	December 31, 2022				September 30, 2022
(In millions)	Principal amount		Fair value		Principal amount		Fair value
Senior 6.125% Notes due September 15, 2028	$	1,000	$	~~986~~307	$	1,000	$	~~1,053~~497
Tranche B-1 Term Loans due December 15, 2027	800		~~795~~275		800		~~802~~433
Tranche B-2 Term Loans due December 15, 2027	743		~~737~~260		743		~~745~~403
Convertible 2.25% Senior Notes due June 15, 2023	350		343		350		368
Tranche B-3 Term Loans due December 15, 2027	350		$	217	350		232
Total	$	2,893	$	2,861	$	2,893	$	2,968
Exchangeable 8.00% Senior Notes due December 15, 2027	250		$	88	250		162
Convertible 2.25% Senior Notes due June 15, 2023	221		9		221		95
Total	$	3,364	$	1,156	$	3,364	$	1,822

The estimated fair value of the Company's Senior Notes and Term Loans 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 Exchangeable Notes and Convertible Notes was determined based on the quoted price of the Exchangeable Notes and Convertible Notes in an inactive market on the last trading day of the reporting period and has been classified as Level 2. The fair value of the outstanding balance under ABL credit agreement approximates its carrying amount due to its short term maturities and seniority over the Company's other outstanding debt instruments.

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.

10. Income Taxes

The Company's effective income tax rate for the three ~~and six~~ months ended ~~March~~December 31, 2022 differed from the U.S. federal tax rate by 727% or $1014 million ~~and 29% or $18 million, respectively,~~ principally related to 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, and the release of ~~reserves~~deferred taxes from ~~statute~~Accumulated ofOther ~~limitation~~Comprehensive ~~expirations,~~Income ~~and~~upon ~~nondeductible~~termination ~~expenses~~of interest rate swaps.

The Company's effective income tax rate for the three ~~and six~~ months ended ~~March~~December 31, 2021 differed from the U.S. federal tax rate by ~~335~~59% or $4728 million ~~and 696% or $56 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; and certain nondeductible expenses.

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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.

~~The components of the pension and post-retirement net periodic benefit (credit) cost for the periods indicated are provided in the table below:~~25

	Three months endedMarch 31,				Six months endedMarch 31,
(In millions)	2022		2021		2022		2021
Pension Benefits - U.S.
Components of net periodic benefit credit
Service cost	$	1	$	1	$	2	$	2
Interest cost	5		5		10		10
Expected return on plan assets	(13)		(13)		(25)		(26)
Amortization of actuarial loss	—		1		—		1
Net periodic benefit credit	$	(7)	$	(6)	$	(13)	$	(13)
Pension Benefits - Non-U.S.
Components of net periodic benefit cost
Service cost	$	1	$	2	$	3	$	4
Interest cost	2		1		3		2
Net periodic benefit cost	$	3	$	3	$	6	$	6
Post-retirement Benefits - U.S.
Components of net periodic benefit credit
Service cost	$	—	$	1	$	—	$	1
Interest cost	1		2		2		4
Expected return on plan assets	—		(2)		—		(4)
Amortization of prior service credit	(2)		(1)		(3)		(2)
Amortization of actuarial loss	1		—		1		1
Settlement gain	—		(14)		—		(14)
Net periodic benefit credit	$	—	$	(14)	$	—	$	(14)

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. In March 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 six months ended March 31, 2022 and does not expect to make any contributions to the U.S. pension plans during the remainder of fiscal 2022.

Contributions to the non-U.S. pension plans were $14 million for the six months ended March 31, 2022. For the remainder of fiscal 2022, the Company estimates that it will make contributions totaling $11 million for non-U.S. plans.

In March 2021, the Company entered into an irrevocable buy-out agreement with an insurance company to settle $209 million of its post-retirement life insurance projected benefit obligations related to certain salaried and represented retirees and their beneficiaries who had 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 during the three and six months ended March 31, 2021.

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~~ended~~The ~~March~~components ~~31,~~of ~~2022,~~ the ~~Company~~pension ~~made payments for retiree medical~~ and ~~dental benefits of $3 million which is net of reimbursements received from the represented employees'~~ post-retirement ~~health~~net ~~trust~~periodic ofbenefit $2(credit) ~~million~~cost ~~related~~for tothe ~~payments in prior~~ periods. ~~The~~indicated ~~Company~~are ~~estimates~~provided itin ~~will make payments for retiree medical and dental benefits totaling $6 million for~~ the ~~remainder~~table ~~of fiscal 2022.~~below:


	Three months ended December 31,
(In millions)	2022		2021
Pension Benefits - U.S.
Components of net periodic benefit credit
Service cost	$	1	$	1
Interest cost	10		5
Expected return on plan assets	(12)		(12)

Net periodic benefit credit	$	(1)	$	(6)
Pension Benefits - Non-U.S.
Components of net periodic benefit cost
Service cost	$	1	$	2
Interest cost	3		1
Amortization of actuarial gain	(3)		—
Net periodic benefit cost	$	1	$	3
Post-retirement Benefits - U.S.
Components of net periodic benefit cost

Interest cost	$	1	$	1

Amortization of prior service credit	(1)		(1)


Net 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 (loss) 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. In March 2021, the American Rescue Plan 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, 2022 and does not expect to make any contributions to the U.S. pension plans during the remainder of fiscal 2023.

Contributions to the non-U.S. pension plans were $5 million for the three months ended December 31, 2022. For the remainder of fiscal 2023, the Company estimates that it will make contributions totaling $19 million for non-U.S. plans.

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 contracts with the Communications Workers of America and the International Brotherhood of Electrical Workers, and contributions from the participants, if required. During the three months ended December 31, 2022, the Company made payments for retiree medical and dental benefits of $2 million and received reimbursements 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 $8 million for the remainder of fiscal 2023.

12. Share-based Compensation

AsThe ofCompany ~~March~~maintains 2,share-based ~~2022,~~compensation ~~the~~plans ~~Board~~under ofwhich ~~Directors~~non-employee directors, employees of the Company ~~and~~or ~~the~~any ~~stockholders~~ of ~~the~~its ~~Company~~affiliates, ~~approved~~and ancertain ~~amendment~~consultants toand ~~the~~advisors ~~Avaya~~may ~~Holdings~~be ~~Corp.~~granted ~~2019~~stock ~~Equity~~options, ~~Incentive~~restricted ~~Plan (as amended~~stock, ~~the~~restricted ~~“2019~~stock ~~Plan”~~units ("RSUs"), ~~which~~performance ~~increased~~awards ~~the~~("PRSUs") ~~number~~and other forms of awards granted or denominated in shares of the Company's common stock, ~~that~~as ~~may~~well beas ~~issued~~certain orcash-based ~~granted~~awards. ~~under~~Pre-tax share-based compensation expense for the ~~2019~~three ~~Plan~~months byended 6December 31,~~500~~ 2022 and 2021 was $1 million and $14 million,~~000~~ ~~shares~~respectively. ~~Awards~~The ~~granted~~decrease ~~under~~in ~~the~~pre-tax ~~2019~~share-based ~~Plan~~compensation ~~reduce~~is ~~the~~primarily ~~aggregate~~due ~~number~~to forfeitures of ~~shares~~RSUs ofand PRSUs which have occurred since the ~~Company's~~first ~~common~~quarter ~~stock~~of ~~that~~fiscal ~~may~~2022. beThe ~~granted~~forfeitures orwere ~~issued~~driven ~~under~~in part by restructuring activities initiated by the ~~2019~~Company ~~Plan~~beginning asin ~~follows:~~the fourth quarter of fiscal 2022.

2019 Plan Award			Reduction to the 2019 Plan Capacity
Restricted stock units granted prior to March 2, 2022			1.7 shares
Restricted stock units granted on or after March 2, 2022			1.5 shares
Stock options and stock appreciation rights (regardless of grant date)			1 share

During the fourth quarter of fiscal 2022, the Company suspended distribution of shares under the 2019 Equity Incentive Plan (the "2019 Plan") and suspended purchases of shares under the Employee Stock Purchase Plan until the Company's registration statements are reinstated. Existing awards issued under the 2019 Plan will continue to vest in accordance with the terms of the

If any awards expire, terminate or are canceled or forfeited for any reason without having been exercised or vested in full, the number of shares of common stock underlying any such award (as described above) will again be available for issuance under the 2019 Plan.26

Pre-tax share-based compensation expense for the three months ended March 31, 2022 and 2021 was $14 million and $13 million, respectively, and $28 million and $27 million for the six months ended March 31, 2022 and 2021, respectively.

Restricted Stock Units

During the six months ended March 31, 2022, the Company granted 2,845,320 restricted stock units ("RSUs") with a weighted average grant date fair value of $19.05 per RSU, and there were 1,084,705 RSUs that vested with a weighted average grant date fair value of $16.58 per RSU.

Performance Restricted Stock Units

During the six months ended March 31, 2022, the Company granted 669,228 performance awards ("PRSUs") with a grant date fair value of $21.89 per PRSU. These PRSUs will vest based on 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.

	Six months ended March 31, 2022
Expected volatility(1)	67.59	%
Risk-free interest rate(2)	0.76	%
Dividend yield(3)	—	%

(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 on its common stock.

During the six months ended March 31, 2022, there were 274,223 PRSUs that vested with a grant date fair value of $11.18 per PRSU.

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respective award agreements. As of December 31, 2022, there were 890,042 RSUs that vested but were unissued under the 2019 Plan. All awards and the shares reserved under the 2019 Plan were canceled upon Emergence.

Restricted Stock Units

During the three months ended December 31, 2022, there were 639,065 RSUs that vested with a weighted average grant date fair value of $18.79 per RSU. The Company did not grant any RSUs during the three months ended December 31, 2022.

Stock Bonus Program

In ~~November~~fiscal 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 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 ofapproved ~~Directors will approve~~ the maximum number of shares that ~~can~~could be issued under the Stock Bonus Program. For fiscal ~~2022~~2023, ~~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~~Board ~~stock~~did ~~over~~not aapprove ~~specified~~any ~~5-trading~~shares ~~day period. The Stock Bonus Program is classified as a liability. The Company records compensation cost~~ for ~~the~~issuance ~~expected~~under ~~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 and six months ended March 31, 2022 was not material~~.

~~Stock~~Upon ~~Options~~implementation of the Plan, all share-based awards were canceled.

During the six months ended March 31, 2022, there were 81,832 stock options exercised with an exercise price of $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 six months ended March 31, 2022 was $1 million.

Employee Stock Purchase Plan

During the six months ended March 31, 2022, the Company withheld $7 million of eligible employee compensation for purchases of common stock and issued 531,339 shares of common stock under its employee stock purchase plan (the "ESPP").

	Six months ended March 31, 2022
Expected volatility(1)	69.22	%
Risk-free interest rate(2)	0.19	%
Dividend yield(3)	—	%

(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 on its common stock.

13. Preferred Stock

There were 125,000 shares of the Company's 3% Series A Convertible Preferred Stock, par value $0.01 per share ("Series A Preferred Stock"), issued and outstanding as of ~~March~~December 31, 2022. ~~The~~Upon ~~Series~~implementation ~~A Preferred Stock is convertible into shares~~ of the ~~Company's~~Plan ~~common~~pursuant ~~stock~~to atthe ~~an initial conversion price of $16.00 per share~~RSA, ~~which represents an approximately 9% interest in~~ the ~~Company's~~Series ~~common~~A ~~stock~~Preferred onStock anwas ~~as-converted~~canceled ~~basis~~upon asEmergence ofand ~~March 31,~~the ~~2022,~~attendant ~~assuming~~board nodesignation ~~holders~~rights ofdescribed ~~options,~~below ~~warrants,~~were ~~convertible notes or similar instruments exercise their exercise or conversion rights~~eliminated.

As ofThe ~~March 31,~~Series ~~2022,~~A ~~the~~Preferred ~~carrying~~Stock ~~value~~was convertible into shares of the ~~Series~~Company's Acommon ~~Preferred~~stock ~~Stock~~at ~~was~~an initial conversion price of $~~131~~16.00 per ~~million~~share, which ~~includes~~represented $6an ~~million~~approximately of9% ~~accreted~~interest ~~dividends~~in ~~paid~~the inCompany's ~~kind.~~common ~~During~~stock ~~the~~on ~~six~~an ~~months~~as-converted ~~ended~~basis ~~March~~as of December 31, 2022, ~~the~~assuming ~~carrying~~no ~~value~~holders of ~~the~~options, ~~Series~~warrants, Aconvertible ~~Preferred~~notes ~~Stock~~or ~~increased~~similar $1instruments ~~million~~exercised ~~due~~their toexercise ~~accreted~~or ~~dividends~~conversion ~~paid in kind~~rights.

22As of December 31, 2022, the carrying value of the Series A Preferred Stock was $134 million, which included $9 million of accreted dividends paid in kind. During the three months ended December 31, 2022, the carrying value of the Series A Preferred Stock increased $1 million due to accreted dividends paid in kind.

In connection with the issuance of the Series A Preferred Stock, the Company granted RingCentral certain customary consent rights with respect to certain actions by the Company, including amending the Company's organizational documents in a manner that would have an adverse effect on the Series A Preferred Stock and issuing securities that are senior to, or equal in priority with, the Series A Preferred Stock. In addition, 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. 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's committee meetings. On November 6, 2020, Robert Theis was elected to join the Company's Board as RingCentral's designee. On October 20, 2022, Robert Theis provided notice of his intent to resign from the Board effective October 31, 2022, in order to focus on his other commitments as General Partner of World Innovation Lab and Lead Independent Director of RingCentral. Mr. Theis's resignation was not due to any disagreement between Mr. Theis and the Company on any matter relating to the Company’s operations, policies, or practices. Subsequent to Mr. Theis's departure, RingCentral nominated Jill K. Frizzley for election to the Company's Board. On December 13, 2022, Ms. Frizzley was elected to join the Board. On the Emergence Date, all members of the Board resigned and the New Board was appointed pursuant to the Plan.

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14. Loss Per Common Share

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:

Basic earnings (loss) per share is calculated by dividing net income (loss) attributable to common stockholders by the weighted average number of common shares outstanding. Diluted earnings (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. In periods with net losses, no incremental shares are reflected as their effect would be anti-dilutive.


	Three months ended December 31,
(In millions, except per share amounts)	2022			2021
Loss per share:
Numerator
Net loss	$	(164)		$	(66)
Dividends to preferred stockholders	(1)			(1)
Undistributed loss	(165)			(67)
Percentage allocated to common stockholders(1)	100.0		%	100.0		%
Numerator for basic and diluted loss per common share	$	(165)		$	(67)

Denominator for basic and diluted loss per common share	87.5			84.7

Loss per common share
Basic	$	(1.89)		$	(0.79)
Diluted	$	(1.89)		$	(0.79)

(1) Basic weighted average common stock outstanding	87.5			84.7
Basic weighted average common stock and common stock equivalents (preferred shares)	87.5			84.7
Percentage allocated to common stockholders	100.0		%	100.0		%

~~The~~For ~~Company's~~the ~~Series~~three Amonths ~~Preferred~~ended ~~Stock~~December ~~are~~31, ~~participating securities~~2022, ~~which requires~~ the ~~application~~Company ofexcluded ~~the two-class method to calculate basic and diluted earnings (loss) per share~~3.2 ~~Under~~million ~~the two-class method~~RSUs, ~~undistributed~~0.3 ~~earnings~~million ~~are allocated to common~~ stock ~~and~~options, ~~participating~~58.1 ~~securities~~million ~~according~~shares tounderlying ~~their~~the ~~respective~~Exchangeable ~~participating rights in undistributed earnings~~Notes, as7.9 ifmillion ~~all~~shares underlying the ~~earnings~~Convertible ~~for~~Notes ~~the~~and ~~period~~Call ~~had~~Spread ~~been~~Warrants, ~~distributed~~22.1 ~~Basic~~million ~~earnings~~shares ~~(loss)~~underlying ~~per~~the ~~common~~outstanding ~~share~~consideration isadvance ~~computed~~received byin ~~dividing~~connection with the ~~net~~Company's ~~income~~strategic ~~(loss)~~partnership ~~attributable~~with toRingCentral ~~common~~and ~~stockholders~~0.1 bymillion ~~the~~shares ~~weighted average number~~ of ~~common~~Series ~~shares~~A ~~outstanding~~Preferred ~~during~~Stock from the ~~period.~~diluted ~~Net income (~~loss) ~~attributable~~per toshare ~~common~~calculation ~~stockholders~~as istheir ~~reduced~~effect ~~for~~would ~~preferred~~have ~~stock~~been ~~dividends~~anti-dilutive. ~~earned~~The ~~and~~Company ~~accretion~~also ~~recognized~~excluded ~~during the period~~3.8 Nomillion ~~allocation~~PRSUs offrom ~~undistributed~~the ~~earnings~~diluted toloss ~~participating~~per ~~securities~~share ~~was~~calculation ~~performed for periods with net losses~~ as ~~such~~either ~~securities~~their doperformance ~~not~~metrics have anot ~~contractual~~yet ~~obligation~~been toattained ~~share~~or intheir ~~the~~effect ~~losses~~would ofhave ~~the~~been ~~Company~~anti-dilutive.

	Three months endedMarch 31,						Six months endedMarch 31,
(In millions, except per share amounts)	2022			2021			2022			2021
Loss per share:
Numerator
Net loss	$	(1)		$	(58)		$	(67)		$	(62)
Dividends to preferred stockholders	(1)			(1)			(2)			(2)
Undistributed loss	(2)			(59)			(69)			(64)
Percentage allocated to common stockholders(1)	100.0		%	100.0		%	100.0		%	100.0		%
Numerator for basic and diluted loss per common share	$	(2)		$	(59)		$	(69)		$	(64)
Denominator for basic and diluted loss per common share	85.6			84.6			85.1			84.2
Loss per common share
Basic	$	(0.02)		$	(0.70)		$	(0.81)		$	(0.76)
Diluted	$	(0.02)		$	(0.70)		$	(0.81)		$	(0.76)
(1) Basic weighted average common stock outstanding	85.6			84.6			85.1			84.2
Basic weighted average common stock and common stock equivalents (preferred shares)	85.6			84.6			85.1			84.2
Percentage allocated to common stockholders	100.0		%	100.0		%	100.0		%	100.0		%

For the three months ended December 31, 2021, the Company excluded 4.6 million RSUs, 0.3 million stock options, 0.2 million shares issuable under the ESPP, 5.6 million 2017 Emergence Date Warrants, 12.6 million shares underlying the Convertible Notes and Call Spread 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 had not yet been attained or their effect would have been anti-dilutive.

~~For~~With the ~~three~~adoption ~~and~~of ~~six~~ASU ~~months~~2020-06 ~~ended~~on ~~March~~October 311, 2022, the Company ~~excluded~~is ~~4.1~~required ~~million~~to ~~RSUs,~~calculate ~~0.3~~the ~~million~~potential ~~stock~~dilutive ~~options,~~effect ~~0.2~~of ~~million~~its ~~shares~~convertible ~~issuable~~instruments under the ~~ESPP,~~if-converted 5method.6 ~~million~~As ~~Emergence~~disclosed ~~Date~~in ~~Warrants~~our ~~and~~fiscal ~~0.1~~2022 ~~million~~Form ~~shares~~10-K offiled ~~Series~~on ASeptember 8, ~~Preferred~~2023, ~~Stock~~the ~~from~~Company ~~the~~has ~~diluted~~been ~~loss~~using ~~per~~the ~~share~~if-converted ~~calculation~~method asto ~~their~~calculate ~~effect~~the ~~would~~dilutive ~~have~~impact ~~been~~of ~~anti-dilutive.~~its ~~The~~convertible ~~Company~~instruments ~~also~~since ~~excluded~~the ~~1.8~~third ~~million~~quarter ~~PRSUs~~of ~~and~~fiscal 02022.3 ~~million~~The ~~shares~~use ~~authorized~~of ~~under~~the if-converted method in the ~~Company's~~current ~~Stock~~period ~~Bonus~~does ~~Program~~not ~~from~~impact the comparability of diluted ~~loss~~earnings per share ~~calculation~~for asthe ~~either~~three ~~their~~months ~~performance~~ended ~~metrics~~December ~~have~~31, ~~not~~2022 ~~yet~~and ~~been~~2021 ~~attained~~as orthe ~~their~~Company's ~~effect~~convertible instruments would have been anti-dilutive under both the treasury stock and if-converted methodologies.

For the three and six months ended March 31, 2021, the Company excluded 3.1 million RSUs, 0.5 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

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million PRSUs from the diluted loss per share calculation as either their performance metrics had not yet been attained or their effect would have been anti-dilutive.

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.

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.

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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 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 endedMarch 31,				Six months endedMarch 31,
	Three months endedDecember 31,
(In millions)	2022		2021		~~2022~~		~~2021~~
REVENUE
Products & Solutions	$	~~223~~136	$	~~226~~231	$	~~454~~	$	~~492~~
Services	~~493~~282		~~513~~482		~~975~~		~~990~~
Unallocated Amounts (1)	—		(1)		—		(1)
	418		713
	$	716	$	738	$	1,429	$	1,481
GROSS PROFIT
GROSS PROFIT
Products & Solutions	66		120
Products & Solutions	$	104	$	134	$	224	$	295
Services	117		291
Services	302		322		593		620
Unallocated Amounts(1)	(35)		(42)
Unallocated Amounts (2)	(35)		(44)		(77)		(87)
	148		369
	371		412		740		828
OPERATING EXPENSES
OPERATING EXPENSES
Selling, general and administrative	221		262
Selling, general and administrative	245		264		507		519
Research and development	50		61
Research and development	60		57		121		112
Amortization of intangible assets	39		40
Amortization of intangible assets	40		39		80		79
Impairment charges	9		—
Restructuring charges, net	310		87		10		12
	348		368		718		722
	329		370
OPERATING INCOME	23		44		22		106
OPERATING LOSS	(181)		(1)
INTEREST EXPENSE AND OTHER INCOME, NET	(37)		(58)		(84)		(114)
INTEREST EXPENSE AND OTHER (EXPENSE) INCOME, NET	(9)		(47)
LOSS BEFORE INCOME TAXES	$	(14190)	$	(1448)	$	~~(62)~~	$	~~(8)~~

(1)Unallocated amounts in ~~Revenue~~Gross ~~represent~~Profit reflect the ~~fair~~effect ~~value~~of ~~adjustment to deferred revenue recognized upon~~ the ~~Company's~~amortization ~~emergence~~of ~~from~~technology ~~bankruptcy~~intangible ~~and excluded from segment revenue~~assets.

(2)Unallocated amounts in Gross Profit include the effect of the amortization of technology intangible assets and the fair value adjustments recognized upon the Company's emergence from bankruptcy which are excluded from segment gross profit.29

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16. Accumulated Other Comprehensive Income (Loss)

The components of Accumulated other comprehensive income (loss) for the periods indicated were as follows:

(In millions)	Pension, Post-retirement and ~~Postemployment~~Post-employment Benefit-related Items		Foreign Currency Translation		Unrealized Gain ~~(Loss)~~ on Interest Rate Swaps		Accumulated Other Comprehensive ~~Loss~~Income
Balance as of December 31, 2021	$	(21)	$	(24)	$	(6)	$	(51)
Balance as of September 30, 2022	$	151	$	1	$	80	$	232
Other comprehensive income before reclassifications	—		1		42		43
Other comprehensive loss before reclassifications	—		(14)		—		(14)
Amounts reclassified to earnings	(26)		—		12(62)		10(68)
Provision for income taxes	—		—		(1418)		(1418)
Balance as of March 31, 2022	$	(23)	$	(23)	$	34	$	(12)
Balance as of December 31, 2022	$	145	$	(13)	$	—	$	132

(In millions)	Pension, Post-retirement and ~~Postemployment~~Post-employment Benefit-related Items		Foreign Currency Translation		Unrealized ~~Gain (~~Loss) on Interest Rate Swaps		Accumulated Other Comprehensive Loss
Balance as of September 30, 2021	$	(20)	$	(37)	$	(34)	$	(91)
Other comprehensive income before reclassifications	—		1413		5715		7128
Amounts reclassified to earnings	(31)		—		2513		2212
Provision for income taxes	—		—		(14)		(14)
Balance as of December 31, 2021	$	(21)	$	(24)	$	(6)	$	(51)
Balance as of March 31, 2022	$	(23)	$	(23)	$	34	$	(12)

(In millions)	Pension, Post-retirement and Postemployment Benefit-related Items		Foreign Currency Translation		Unrealized Loss on Interest Rate Swaps		Accumulated Other Comprehensive Loss
Balance as of December 31, 2020	$	(96)	$	(52)	$	(80)	$	(228)
Other comprehensive income before reclassifications	50		21		17		88
Amounts reclassified to earnings	(15)		—		13		(2)
Provision for income taxes	(1)		—		—		(1)
Balance as of March 31, 2021	$	(62)	$	(31)	$	(50)	$	(143)

Reclassifications from Accumulated other comprehensive income (loss) related to changes in unamortized pension, post-retirement and post-employment benefit-related items are recorded in Other (expense) income, net. Reclassifications from Accumulated other comprehensive income (loss) related to the unrealized gain (loss) on interest rate swap agreements are recorded in Interest expense.

(In millions)	Pension, Post-retirement and Postemployment Benefit-related Items		Foreign Currency Translation		Unrealized Loss on Interest Rate Swaps		Accumulated Other Comprehensive Loss
Balance as of September 30, 2020	$	(108)	$	(46)	$	(91)	$	(245)
Other comprehensive income before reclassifications	62		15		16		93
Amounts reclassified to earnings	(15)		—		25		10
Provision for income taxes	(1)		—		—		(1)
Balance as of March 31, 2021	$	(62)	$	(31)	$	(50)	$	(143)

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 gain (loss) on interest rate swap agreements are recorded in Interest expense.

17. Related Party Transactions

~~The~~As ~~Company's~~of ~~Board~~December 31, of2022, ~~Directors~~the isBoard was comprised of eight directors, including the Company's Chief Executive Officer and seven non-employee directors.

~~Specific~~On ~~Arrangements~~October ~~Involving~~20, 2022, Robert Theis, who was elected to join the Board as RingCentral's designee on November 6, 2020, provided notice of his intent to resign from the Board effective October 31, 2022. On December 13, 2022, Jill K. Frizzley was appointed to the Board in Mr. Theis' place pursuant to the Company's ~~Current~~strategic ~~Directors~~partnership ~~and~~with ~~Executive~~RingCentral. ~~Officers~~See Note 13, "Preferred Stock," to our unaudited interim Condensed Consolidated Financial Statements for additional information.

~~Stephan~~On ~~Scholl~~February 1, a2023, ~~Director of~~ the ~~Company,~~Board isincreased the ~~Chief~~size ~~Executive Officer~~ of ~~Alight~~the ~~Solutions~~Board ~~LLC~~by ~~("Alight")~~one director, afrom ~~provider~~eight ofto ~~integrated~~nine ~~benefits~~members, ~~payroll~~ and ~~cloud~~appointed ~~solutions,~~Carrie ~~and~~W. heTeffner ~~also~~to ~~serves~~fill onthe ~~Alight's~~vacancy ~~board~~resulting offrom ~~directors. During both~~ the ~~three months~~ increase.

25Specific Arrangements Involving the Company's Directors and Executive Officers

~~Table~~Stephan Scholl, a Director of ~~Contents~~the Company who resigned in connection with Emergence, is the Chief Executive Officer of Alight Solutions LLC ("Alight"), a provider of integrated benefits, payroll and cloud solutions, and he also serves on Alight's board of directors. During each of the three months ended December 31, 2022 and 2021, the Company purchased goods and services from subsidiaries of Alight of $1 million. As of December 31, 2022 outstanding accounts payable due to Alight was immaterial. As of September 30, 2022, outstanding accounts payable due to Alight was $1 million.

ended March 31, 2022 and 2021, the Company purchased goods and services from subsidiaries of Alight of $1 million. During both the six months ended March 31, 2022 and 2021, the Company purchased goods and services from subsidiaries of Alight of $2 million. As of both March 31, 2022 and September 30, 2021, outstanding accounts payable due to Alight were not material.

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, the Company does not record a liability, but instead discloses 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.

Other than as described below, in the opinion of the Company's management, 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, 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 March 31, 2022, the suit remains in the discovery phase and a trial is scheduled for September 6, 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.30

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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 concerned activities related to the Company's development of the CU360 collaboration unit. Solaborate alleged breach of contract, trade secret misappropriation and unfair business practices, among other causes of action. During the third quarter of fiscal 2022, the Company accrued an expense representing its best estimate of the probable loss which was not material.

On February 3, 2023, the Company reached an agreement to settle the lawsuit with Solaborate and agreed to pay an amount consistent with the expense it accrued as of December 31, 2022.

The Company enters into indemnification agreements with each of the Company's directors and officers. These agreements require the Company to indemnify these individuals to the fullest extent permitted under Delaware law against liabilities that may arise by reason of their service to the Company, and to advance expenses incurred as a result of any proceeding against them as to which they could be indemnified. Subject in all respects to applicable law, these agreements generally survive a director's or officer's resignation and/or termination and generally require the Company to indemnify such individuals unless the conduct that is the subject of a claim constitutes a breach of their duty of loyalty to the Company or to the Company's stockholders, or is an act or omission not taken in good faith, or which involves intentional misconduct or a knowing violation of the law. In connection with the investigations, the Company has received requests under such indemnification agreements to provide funds for legal fees and other expenses and expects additional requests in connection with the Investigations and related litigation. The Company has not recorded a liability for expected future expenses as of December 31, 2022 for these matters as it cannot estimate the ultimate outcome at this time but has expensed payments made through December 31, 2022. The Company maintains a directors and officers insurance policy under which a portion of the indemnification expenses may be recoverable to mitigate its exposure to potential indemnification obligations. As of December 31, 2022, the Company has not reached its insurance deductible and has not recorded a receivable related to the indemnification claims. We are unable to make a reliable estimate of the eventual cash flows by period related to the indemnification agreements and related insurance recoveries.

Avaya notified the SEC of the Audit Committee Investigations and the SEC initiated an investigation to review, among other things, the circumstances surrounding Avaya's financial results for the quarter ended June 30, 2022. Avaya has been cooperating with the SEC's investigation, which is on-going. At this time, the Company is not able to predict the outcome or consequences of the SEC's investigation, however, an adverse outcome could have a material adverse effect on the Company's financial position, results of operations or cash flows.

On January 3, 2023, Jeffrey A. Fletcher, et al., filed a putative securities class action complaint (Civil Action No. 1:23-cv-00003) in the United States District Court Middle District of North Carolina, naming Avaya Holdings Corp. and certain of our current and former officers as defendants. The complaint alleged violations of the Exchange Act, based on allegedly false or misleading statements related to the Company’s internal control over financial reporting, the effectiveness of our internal controls over our whistleblower policies and ethics and compliance program and our financial condition. The plaintiffs sought awards of compensatory damages, among other relief and their costs and attorneys’ and experts’ fees. On February 28, 2023, the plaintiff voluntarily filed for dismissal of the action without prejudice, as to all defendants. At this time, the Company is not able to predict the ultimate outcome of this matter, however, an adverse outcome could have a material adverse effect on the Company's financial position, results of operations or cash flows.

On February 1, 2023, A6 Capital Management LP, et al., filed a summons with notice (Index No. 650626/2023) in the Supreme Court of the State of New York, New York County, naming certain of our former directors and officers as defendants. The plaintiffs were current or former investors in certain unsecured convertible notes issued by the Company in 2018 and due 2023 (the “Convertible Notes”) and certain plaintiffs invested in the Company’s secured term loan issued in July 2022. The complaint alleged fraud as a result of allegedly false statements regarding the Company’s finances and management, which the plaintiffs relied upon in holding or purchasing the Company’s Convertible Notes. The plaintiffs sought awards of compensatory damages, among other relief. On May 3, 2023, the plaintiffs voluntarily filed an amended notice of discontinuance with prejudice, as to all parties.

On February 14, 2023, Oliver Jiang, et al., filed a putative class action complaint (Civil Action No. 1:23-cv-1258) in the United States District Court for the Southern District of New York against Avaya Holdings Corp., and certain of our former officers as defendants (collectively, "Jiang Suit Defendants"). The complaint alleged the purported inclusion of false statements and material omissions in securities filings, and press releases filed with the SEC or issued, as applicable, between October 3, 2019 and November 29, 2022, regarding Avaya’s Q3 2022 earnings guidance and results and the Company’s relationship with RingCentral (the "Jiang Securities Lawsuit"). The lawsuit alleges that the Jiang Suit Defendants exploited Avaya’s insufficient reporting controls and procedures, which resulted in inaccurate budgeting and reporting, to inflate Avaya’s stock price, at which

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point the Jiang Suit Defendants sold shares and secured financing on improper terms, all in violation of Section 10(b) of the Exchange Act and Rule 10b-5, as well as for derivative “control person” liability, which was pled against Mr. Chirico, our former CEO, and Mr. McGrath, our former Chief Financial Officer, for Avaya’s actions, and, vice versa, against the Company—pursuant to Section 20(a). This case was filed after the Company filed its petition for Chapter 11 proceedings and therefore the plaintiff voluntarily dismissed the case against the Company. The Plaintiff’s claims against Mr. Chirico and Mr. McGrath remain and are subject to the indemnification agreements described above.

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 both ~~March~~December 31, 2022 and September 30, ~~2021~~2022, the amount reserved for product warranties was $21 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 ~~March~~December 31, 2022, the maximum potential payment obligation with regards to letters of credit, guarantees and surety bonds was $6764 million. The outstanding letters of credit are ~~collateralized~~deemed to have been issued under the DIP ABL Facility, other than with respect to letters of credit issued by ~~restricted~~Goldman Sachs, which are cash collateralized. The cash collateral of $4 million, ~~which~~ is characterized as restricted cash and included in Other assets on the Condensed Consolidated Balance Sheets as of ~~March~~December 31, 2022.

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 outsourced manufacturers due to actual sales of product varying from forecast and due to transition of manufacturing from one vendor to another.

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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.

~~From~~The ~~time~~Company maintains a reseller agreement with an equipment vendor to ~~time~~procure, build and store IT equipment on behalf of the Company ~~also~~based ~~enters~~upon ~~into~~letters ~~cloud~~of ~~services~~intent ~~agreements~~or toother ~~support~~order ~~the~~forms ~~delivery~~provided ofby the Company’s. ~~Avaya~~The ~~OneCloud~~Company ~~solutions~~either topurchases ~~its~~the ~~customers.~~equipment ~~These~~or ~~contracts~~leases ~~range~~the ~~from~~equipment ~~three~~through toa ~~six~~third ~~years~~party ~~and~~vendor ~~typically~~for ~~contain~~use ~~minimum~~in ~~consumption~~its ~~commitments~~data ~~over~~centers, ~~the~~predominantly ~~life~~to ofsupport ~~the~~its ~~agreements~~cloud customers. AsUnder ofthe ~~March 31~~agreement, ~~2022,~~ the Company’s ~~remaining~~right ~~commitments~~to ~~under~~use ~~its~~the ~~cloud~~equipment ~~services~~commences ~~agreements~~upon ~~and~~delivery ~~hosting~~of ~~agreements~~the ~~were~~equipment. ~~$200~~The ~~million,~~Company's ofmaximum ~~which~~obligation $5under ~~million,~~these ~~$21~~arrangements ~~million,~~based ~~$15~~on ~~million,~~equipment ~~and~~held ~~$16~~by ~~million~~the isvendor ~~required~~as toof beDecember 31, ~~utilized~~2022 bywas ~~fiscal~~$6 ~~2023,~~million. ~~2024,~~The ~~2025~~Company ~~and~~is ~~2026,~~entitled ~~respectively,~~to ~~with~~return the ~~remaining~~equipment ~~balance~~subject ~~required~~ to becertain ~~utilized by fiscal 2027~~conditions.

From time to time, the Company also enters into cloud services agreements to support the delivery of the Company’s Avaya cloud solutions to its customers. These contracts range from three to six years and typically contain minimum consumption commitments over the life of the agreements. As of December 31, 2022, the Company’s remaining commitments under its cloud services agreements and hosting agreements were $184 million, of which $11 million, $15 million and $16 million is required to be utilized by fiscal 2024, 2025 and 2026, respectively, with the remaining balance required to be utilized by fiscal 2027.

During fiscal 2022, the Company entered into an agreement to acquire third-party software licenses to enhance its product portfolio serving large and complex contact center environments. The consideration for the licenses is sales-based and includes a minimum commitment which is payable to the extent that the sales-based consideration does not meet specified thresholds

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within the agreement. As of December 31, 2022, the Company's remaining minimum commitment under the agreement is $8 million for each of fiscal 2023, 2024 and 2025.

On February 14, 2023, the Company and RingCentral amended the terms of the First Amended and Restated Framework Agreement, dated February 10, 2020, and the related partnership documents executed in connection therewith, by entering into the Second Amended and Restated Framework Agreement and the related partnership documents executed in connection therewith (the "Amended and Restated RingCentral Agreements"). Among other things, the Amended and Restated RingCentral Agreements, contemplate (i) the Company continuing to serve as the exclusive sales agent for Avaya Cloud Office by RingCentral ("Avaya Cloud Office" or "ACO"); (ii) expanded go-to-market constructs that will enable the Company to directly sell ACO seats into its installed base; (iii) cash compensation to the Company as ACO seats are sold along with the elimination or modification of certain other financial obligations of the Company under the original agreements, including the waiver of the remaining balance of the consideration advance paid by RingCentral to the Company; and (iv) the Company's agreement to purchase seats of ACO in the event certain volumes of ACO sales, which increase over the time period, are not met. The Company's volume commitments are based on cumulative ACO sales that are measured quarterly during the term of the Amended and Restated RingCentral Agreements, subject to the terms and conditions of such agreements. In the event that the cumulative number of ACO seats sold as of the end of each calendar quarter is lower than the agreed upon threshold established for such quarter, the Company will be required to purchase a number of ACO seats equal to such shortfall from RingCentral. Any such ACO seats are subject to certain limitations and must be purchased for a two-year paid term with payments made monthly and pricing that is variable based on sales volumes by jurisdiction, contract size and product tier. The Company may resell such ACO seats to end customers or maintain them for internal use.

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 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.

2719. Subsequent Events

Chapter 11

See Note 1, "Background and Basis of Presentation," Note 7, "Financing Arrangements," and Note 18, "Commitments and Contingencies," to our Condensed Consolidated Financial Statements for information related to the following, all of which occurred subsequent to December 31, 2022.

▪the Board and Audit Committee Investigations;

▪the Chapter 11 Filing;

▪the Plan;

▪the Debtor in Possession Financing and Exit Financing;

▪the NYSE Delisting; and

▪the Emergence from Voluntary Reorganization under Chapter 11 of the Bankruptcy Code.

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ABL Credit Agreements

During the second quarter of fiscal 2023, the Company repaid the remainder of the ABL Credit Agreement.

Director Appointment

On February 1, 2023, the Board increased the size of the Board by one director, from eight to nine members and appointed Carrie W. Teffner to fill the vacancy resulting from the increase in the size of the Board.

Fiscal 2023 Restructuring Program

During the second quarter of fiscal 2023, the Company authorized a reduction in force with respect to its global employees in connection with the Company’s cost-reduction actions. The reduction in force is aimed at aligning the size of Avaya’s workforce with its operational strategy and cost structure. The Company estimates that it will incur approximately $57 million to $65 million in pre-tax restructuring charges in connection with this reduction in force, all of which are expected to be in the form of cash-based expenditures and substantially all of which are expected to be related to employee severance and other termination benefits. The Company expects to complete the most recently authorized reduction in force and recognize substantially all of these pre-tax restructuring charges during fiscal 2023. As the Company continues to evaluate opportunities to streamline its operations, it may identify additional cost reduction actions that will include workforce reductions and other incremental cost reduction actions.

Amended and Restated RingCentral Contracts

On February 14, 2023, the Company and RingCentral entered into the Amended and Restated RingCentral Agreements. Among other things, the Amended and Restated RingCentral Agreements contemplate (i) the Company continuing to serve as the exclusive sales agent for ACO; (ii) expanded go-to-market constructs that will enable the Company to directly sell ACO seats into its installed base; (iii) cash compensation to the Company as ACO seats are sold along with the elimination or modification of certain other financial obligations of the Company under the original agreements, including the waiver of the remaining balance of the consideration advance paid by RingCentral to Avaya Inc; and (iv) the Company's agreement to purchase seats of ACO in the event certain volumes of cumulative ACO sales are not met (see Note 18, "Commitments and Contingencies").

Post-Emergence Board of Directors

Upon Emergence, all members of our Board resigned. Alan B. Masarek, our Chief Executive Officer, was appointed to the new Board, together with the following individuals: Patrick J. Bartels Jr., Patrick J. Dennis, Robert Kalsow-Ramos, Marylou Maco, Aaron Miller, Donald E. Morgan III, Thomas T. Nielsen and Jacqueline D. Woods.

Conversion of Avaya Inc. into a Delaware Limited Liability Company

On May 1, 2023, Avaya Inc., a wholly-owned subsidiary of Avaya and its primary operating subsidiary, was converted from a Delaware corporation into a Delaware limited liability company and its name was changed to Avaya LLC.

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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. The following Management’s Discussion and Analysis of Financial Condition and Results of Operations is intended to help the reader understand the results of operations and financial condition of the Company. 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, ~~2021~~2022, included in our Annual Report on Form 10-K for the fiscal year ended September 30, ~~2021~~2022 filed with the United States Securities and Exchange Commission ("SEC") on ~~November 22~~September 8, ~~2021~~2023.

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. Capitalized terms used in this Management’s Discussion and Analysis of Financial Condition and Results of Operations not otherwise defined have the meaning given to them in the notes to the Company’s unaudited Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report on Form 10-Q.

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~~worldwide ~~the globe~~ to succeed by creating intelligent communications experiences for our clients, their employees and their customers. Avaya ~~builds~~is building innovative open, converged ~~unified~~contact ~~communications~~center ~~and collaboration~~ ("~~UCC~~CC") and ~~contact~~unified ~~center~~communications and collaboration ("CCUCC") software solutions to enhance and simplify communications and collaboration in the cloud, on-~~premise~~premises or as a hybrid of both. ~~Our~~We ~~global,~~offer ~~experienced~~hardware ~~team~~and ofgateway ~~professionals~~solutions, ~~delivers~~including ~~award-winning~~devices ~~services~~that ~~from~~enhance ~~initial~~collaboration ~~planning~~ and ~~design~~productivity, ~~to seamless implementation~~ and ~~integration,~~position organizations to ~~ongoing~~incorporate ~~managed~~future ~~operations,~~technological ~~optimization, training and support~~advancements.

~~Avaya~~Our ~~shifted~~global, ~~its~~experienced ~~entire~~team ~~comprehensive portfolio~~ of ~~capabilities~~professionals todelivers ~~Avaya~~award-winning ~~OneCloud,~~services ~~which~~from ~~offers~~initial ~~significant~~planning ~~capabilities~~and ~~across contact center (OneCloud CCaaS)~~design, ~~unified~~to ~~communications~~seamless implementation and ~~collaboration (OneCloud UCaaS)~~integration, ~~and~~to ~~communications~~ongoing ~~platform~~managed asoperations, aoptimization ~~service~~and ~~(OneCloud CPaaS)~~support. We ~~believe~~also ~~the~~help ~~Avaya~~clients ~~OneCloud~~customize ~~open,~~and ~~composable~~personalize ~~platform~~our ~~approach~~software ~~uniquely~~solutions ~~positions us~~ to address ~~a customer's needs in creating a digital workplace for~~ their ~~campus-based~~specific ~~and remote employees through Unified Communications and Collaboration and the Customer Experience Center, our name for contact centers, helping clients deliver tangible business results~~needs.

Businesses are built by the experiences they provide, and Avaya ~~also~~solutions ~~offers~~deliver ~~one~~millions of ~~the~~those ~~broadest~~experiences ~~portfolios~~globally ofevery ~~business~~day. ~~devices~~With ina ~~the~~global ~~industry,~~install base including ~~handsets,~~many ~~video~~of ~~conferencing~~the ~~units~~largest ~~and~~enterprise ~~headsets~~customers towith ~~meet~~ the ~~needs~~most ofcomplex ~~every~~needs, ~~type~~Avaya ofis ~~worker~~shaping ~~across~~the afuture ~~customer’s~~of ~~organization~~businesses and ~~help~~workplaces, ~~our~~with ~~customers~~innovation ~~get~~and ~~the~~partnerships ~~most~~that ~~out~~power oftangible ~~their~~business ~~communications investments~~results. ~~Avaya~~Our ~~IP-enabled~~communications ~~handsets~~solutions power tailored, ~~multimedia~~effortless ~~devices~~customer and ~~conferencing~~employee ~~systems~~experiences ~~enhance~~that ~~collaboration~~enable ~~and~~our ~~productivity,~~clients to effectively engage and ~~position~~interact ~~organizations~~with toeach ~~incorporate~~other ~~future~~and ~~technological~~with ~~advancements~~their customers.

~~Our~~In ~~business~~serving ~~has~~both ~~two~~our ~~operating~~existing ~~segments:~~and ~~Products~~new &customers ~~Solutions~~across verticals, Avaya is uniquely positioned to meet customers where they are in their digital transformation and ~~Services~~journeys to cloud communications, so they can innovate without disruption to gain the benefit of high-value cloud capabilities. We offer a full range of software sales and licensing models that can be deployed on-premises or via a public/multi-tenant cloud, private/dedicated instance cloud or as a hybrid cloud solution. With our open, extensible development platform, customers and third parties can create custom applications and automated workflows for their unique needs and integrate Avaya’s capabilities into the customer's existing infrastructure and business applications. Our solutions enable a seamless communications experience that adapts to how employees work, instead of changing how they work.

Operating Segments

The Company has two operating segments: Products & Solutions and Services.

Products & Solutions

Products & Solutions encompasses our ~~UCC~~CC and CCUCC software platforms, applications and devices, including cloud-based solutions embedded with Artificial Intelligence ("AI") to create enhanced user experiences and improve performance.

•Contact Center: Avaya’s ~~OneCloud~~industry-leading ~~UCaaS~~contact center solutions enable ~~organizations~~clients to ~~reimagine~~build ~~collaborative work environments and help companies increase employee productivity, improve customer service and reduce costs. With Avaya OneCloud UCaaS, organizations can provide their workers with~~ a ~~single~~customized ~~app~~portfolio ~~for all-channel calling, messaging, meetings and team collaboration with the same ease~~ of ~~use as existing consumer~~ applications ~~("apps").~~to ~~Avaya~~drive ~~embeds~~stronger ~~communications~~customer ~~directly~~engagement ~~into the apps, browsers~~ and ~~devices~~higher ~~employees~~customer ~~use~~lifetime ~~every~~value. ~~day,~~Our ~~giving them a more natural~~reliable, ~~efficient~~secure and flexible way to connect, engage, respond and share where and how they want. We continue to integrate Artificial Intelligence ("AI") within our cloud based solutions to create enhanced user experience and improve performance.

Avaya's industry-leading digital contact center solutions, Avaya OneCloud CCaaS, enable clients to build a customized portfolio of applications to 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. Avaya is delivering OneCloud CCaaS solutions for cloud deployment and we continue to aggressively integrate AI, machine learning and leading-edge cybersecurity capabilities into our portfolio, providing our clients a deeper understanding of their customers' needs with a robust and secure platform.35

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~~Avaya~~scalable ~~OneCloud~~communications ~~CPaaS~~solutions ~~combines~~include ~~the~~voice, ~~cloud~~email, ~~with~~chat, ~~our~~social ~~communications~~media, ~~platforms~~video, ~~providing~~workforce aengagement ~~development~~and ~~platform~~third-party integration that can improve customer service and ~~the~~help ~~application~~companies ~~programming~~compete ~~interfaces~~more ~~that~~effectively. ~~enable~~Avaya ~~developers~~delivers toContact ~~easily~~Center ~~integrate~~as ~~both~~a ~~UCC~~Service ("CCaaS") solutions for cloud deployment, and CCwe ~~communications~~continue ~~capabilities~~to ~~directly~~support ~~into~~enterprises ~~internal~~with ~~and~~world-class ~~customer~~premises-~~facing~~based ~~applications~~solutions and ~~workflows~~add new value by complementing this highly dependable infrastructure with new capabilities from the cloud. ~~Organizations~~We ~~can~~continue ~~quickly~~to ~~deliver~~integrate ~~modular~~AI and automation capabilities into our portfolio, ~~composable~~providing ~~apps~~our ~~and~~clients ~~experiences~~a ~~that~~deeper ~~meet~~understanding ~~ever-changing~~of ~~customer~~their customers’ needs with a robust and ~~operational~~secure ~~needs~~platform.

•Unified Communications: Avaya communications and collaboration solutions support hybrid working environments, empowering teams with fast, always-on continuous collaboration from anywhere. Employees can communicate in context with better access to communication tools and better quality of communications to help deliver greater business impacts.

Avaya multi-tenant cloud-based UCaaS solutions integrate chat, file sharing and task management with real-time collaboration including calling, meetings and content sharing for distributed team productivity. Avaya offers Avaya Cloud Office in partnership with RingCentral, giving customers looking to replace outdated or disparate legacy telephony systems with a simple, comprehensive communications solution. Our on-premises Unified Communications ("UC") solutions, IP Office for midmarket clients and Avaya Aura for enterprise clients continue to deliver high reliability and functionality that is preferred in a variety of situations, including specific verticals, or where connectivity may be an issue.

Services

Complementing our product and solutions portfolio is aan ~~global,~~ award-winning global services portfolio, delivered by Avaya and our extensive partner ecosystem. ~~Our~~Within our services portfolio, ~~which~~we ~~includes~~utilize ~~solution~~a ~~upgrades~~variety of formal survey and ~~provides~~customer ~~new~~feedback ~~technology~~mechanisms ~~through~~to drive continuous improvement and streamlined process automation, with a focus on constantly increasing our ~~Avaya~~value ~~OneCloud~~to ~~subscription~~customers. Our innovative offerings provide solutions for new clients who want to directly utilize our cloud solutions, ~~consists~~support offor clients who have the need for hybrid cloud solutions that maximize the value their on-premises systems can deliver, and flexible migration paths for our premises-based customers. This is delivered and supported by:

•~~Global~~Professional ~~Support~~ Services ~~provide~~enable ~~offerings~~our ~~that~~customers ~~help~~to ~~businesses~~take ~~protect~~full advantage of their ~~technology~~IT and communications solution investments ~~and~~to ~~address~~drive ~~the~~measurable ~~risk~~business ofresults. ~~system~~Avaya ~~outages~~has repositioned its professional services organization to focus on go-forward customer needs. WeThe ~~help~~new Avaya Customer Experience Service ("ACES") brings our depth of experience as our experts partner with customers ~~gain~~and aguide ~~competitive~~them ~~edge~~along ~~through~~each ~~proactive~~step ~~problem~~of ~~prevention,~~the ~~rapid~~solution ~~resolution~~lifecycle to deliver services that add value and ~~continual~~drive ~~solution~~business ~~optimization~~transformation — including journey to cloud consulting services. ~~Global~~The ~~support~~role of professional services ~~also~~organizations ~~provide~~changes ~~software~~in ~~solutions~~a ~~delivered~~cloud ~~through~~world, moving from implementations to cloud migration. ACES takes a ~~subscription~~client-led ~~model~~approach to ~~provide~~bring ~~our~~the ~~customers~~expertise anand ~~improved~~practice ~~user~~areas ~~experience~~that help clients define the choices and ~~solution~~pace ~~enhancements~~for their journey, based on their priorities for experiences and outcomes. ~~Most~~Importantly, oforganizations ~~our~~can ~~global~~bring ~~support~~forward ~~services~~the ~~revenue~~customizations isthey ~~recurring~~have inbuilt ~~nature~~over the years and ~~based~~add onnew ~~multi-year~~value with AI and cloud capabilities. Most of our professional services ~~contracts~~revenue is non-recurring in nature.

•Enterprise Cloud and Managed Services enable customers to take advantage of our technology via the cloud, on-~~premise,~~premises solutions or a hybrid of both, depending on the ~~solution~~system and the needs of the customer. Avaya focuses on customer performance and growth, encompassing software releases, operating customer cloud, premise or hybrid-based communication systems and helping customers migrate to next-generation business communications environments. Most of our enterprise cloud and managed services revenue is recurring in nature and based on multi-year services contracts.

•~~Professional~~Global Support Services ~~enable~~help ~~our~~businesses ~~customers~~protect totheir ~~take~~technology ~~full~~investments ~~advantage~~and address the risk of ~~their~~business-impacting IToutages. Understanding that agility and ~~communications~~high ~~solution~~availability ~~investments~~are critical to ~~drive~~maintain ~~measurable~~or ~~business~~gain ~~results.~~competitive ~~Our~~advantage, ~~experienced~~we ~~consultants~~facilitate those capabilities through proactive problem prevention, rapid resolution, continual solution optimization, and ~~engineers~~we ~~partner~~increasingly ~~with~~leverage ~~customers~~automation ~~along~~to ~~each~~onboard ~~step~~and manage a customer’s communications infrastructure, for faster, more effective deployments from proof of concept to production, and ever-increasing automation. Our subscription offering sets a foundation for continually evolving the ~~solution~~customer ~~lifecycle~~experience toby ~~deliver~~providing ~~services~~access ~~that~~to ~~add~~future ~~value~~capabilities and ~~drive~~solution ~~business transformation~~enhancements. Most of our ~~professional~~global support services revenue is ~~non-~~recurring in nature.

~~With~~Through ~~these~~our comprehensive services, ~~customers~~we ~~can~~support ~~leverage~~our ~~communications~~customers' ~~technology~~ability to ~~help~~fully ~~them~~leverage our technology and maximize their business results. WeOur ~~help~~solutions ~~our customers use communications to minimize the risk of outages,~~ drive employee productivity improvements and ~~deliver~~ a differentiated customer experience.

Our services teams ~~also~~ help our customers ~~transition~~maximize at their ~~desired~~ability ~~pace~~ to benefit from Avaya's next-generation communications solutions. Customers can choose the level of support ~~for their communications solutions~~ best suited for their needs, ~~which~~aligned ~~may~~with ~~include~~ deployment, ~~training,~~ monitoring, solution management, optimization and more. Our ~~systems~~enhanced ~~and service team's~~ performance monitoring, ~~can~~coupled ~~quickly~~with ~~identify~~a ~~and~~continuous ~~address issues before they arise. Remote diagnostics and resolutions~~ focus on ~~fixing~~automation ~~existing~~allows ~~problems~~us ~~and avoiding potential issues in order~~ to ~~help~~quickly ~~our~~identify ~~customers save time~~ and ~~reduce~~remediate ~~the~~issues ~~risk~~to ofavoid anbusiness ~~outage~~impact.

~~OneCloud Business Highlight~~36

~~During~~Table ~~the six months ended March 31, 2022, 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.Contents

Recent Developments

As previously disclosed, on February 14, 2023 (the “Petition Date”), Avaya Holdings and certain of its direct and indirect subsidiaries (the “Debtors”) entered into a Restructuring Support Agreement (the “RSA”) with certain of its creditors and RingCentral which contemplated the Plan.

On the Petition Date, the Debtors commenced the Chapter 11 Cases in the United States Bankruptcy Court for the Southern District of Texas (the “Bankruptcy Court”). The Chapter 11 Cases were jointly administered under the caption In re Avaya Inc., et al., case number 23-90088.

The Bankruptcy Court confirmed the Plan on March 22, 2023 and the Debtors satisfied all conditions required for Plan effectiveness and emerged from the Chapter 11 Cases on May 1, 2023.

Upon Emergence, the Debtors reduced their total debt by more than 75%, and increased their liquidity position to over $650 million.

See Note 1, “Background and Basis of Presentation,” Note 7, "Financing Arrangements," and Note 19, "Subsequent Events," to our unaudited Condensed Consolidated Financial Statements for additional information on the Chapter 11 Cases as well as:

▪the Board and Audit Committee Investigations;

▪the Chapter 11 Filing;

▪the Restructuring Support Agreement;

▪the Automatic Stay;

▪the Plan;

▪the Debtor in Possession Financing and Exit Financing;

▪the NYSE Delisting; and

▪the Emergence from Voluntary Reorganization under Chapter 11 of the Bankruptcy Code.

Cost-Cutting Initiative

Since July 2022, the Company has initiated a number of cost-cutting measures that are expected to primarily impact the Company’s overall selling, general and administrative expenses, as well as discretionary spending, including but not limited to reductions in force with respect to employees globally aimed at aligning the size of the Company’s workforce with the Company’s operational strategy and cost structure. As a result of these cost-cutting actions, the Company expects to generate more than $500 million in annual cost reductions. The Company has commenced these actions which began to yield quantifiable savings in the first quarter of fiscal 2023 and are expected to be completed in fiscal 2024.

OneCloud Business Updates

During the first quarter of fiscal 2022, the Company executed a OneCloud arrangement for a large global financial institution with an estimated total contract value at that time in excess of $400 million over a term of up to 7 years. The contract was subsequently canceled during the fourth quarter of fiscal 2022. As a result, in the fourth quarter of fiscal 2022 the Company recognized revenue of $14 million and expenses of $22 million, which includes impairment of fixed assets, acceleration of previously deferred costs and other third party costs, associated with this arrangement.

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

~~•UCC,~~Cloud CCGrowth and ~~CPaaS are converging to become part of an integrated services offering delivering next-generation communications capabilities across a host of devices and channels.~~Migration:

•~~Preference~~Growth ~~for~~in cloud-based technologies continues as businesses focus on digital transformation projects. This expansion of cloud delivery of software applications and management of ~~multiple and~~ varied devices ~~continues~~in toturn ~~grow,~~leads ~~all~~to ofan ~~which~~increasing ~~must~~demand befor ~~handled~~reliability ~~with~~and ~~the~~ security ~~that business demands~~.

•~~The~~Even ~~experience~~with ~~economy continues to grow. The experience economy is based on~~ the ~~concept~~growing ~~that~~contact ~~experience~~center ismarket aconversion ~~key~~to ~~source of value — it is a differentiator that creates competitive advantage for products and services. As consumers embrace new technologies and devices in creative ways and at an accelerating pace~~cloud, ~~Avaya is continuing to invest in AI~~on-~~powered~~premises solutions ~~delivered~~remain ~~through~~a ~~cloud~~meaningful ~~and~~share ~~subscription 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 ~~customer~~market, ~~experience~~estimated ~~and~~at ~~transform~~~48% ~~the~~in ~~Digital Workplace~~2026.

29•While companies seek innovation, they also want to avoid disruption. The ability to add modular innovation over the top of existing systems can drive significant value, enabling them to transform in a phased approach. This preference

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for a hybrid approach that mitigates risk favors vendors that have a large install base of customers with dependable technology in place.

•With the increasing overlap between CC and UCC, driven by customer workflows and the need to bring the back office into the frontline of the company, platforms that deliver integrated CCaaS and UCaaS are the foundation of next-generation business communications solutions. A converged, integrated offering for next-generation communications capabilities delivered across a host of mobile devices, and multiple communication and customer service channels bridges what has typically been siloed CC and UCC applications into one powerful tool.

Hybrid/Distributed Workforce:

•A clear priority is the business need to support individuals' expectations for flexible, multi-channel communications and remote and hybrid work styles that have arisen out of the COVID-19 pandemic. The global pandemic altered the way employees and end customers interact and engage, resulting in broad impacts to the ways businesses approach their internal and customer-facing communications planning and platforms.

•Evolving hybrid work environments highlight the need for organizations to ensure consistent collaboration experiences in unpredictable situations, regardless of workers' locations or time zones. Avaya solutions are well positioned to enable this work from anywhere approach while maintaining security, reliability and scalability requirements.

•Businesses plan to modify their use of office space to accommodate hybrid and remote work. Modifications will include space reduction, implementing hot-desking and hoteling solutions and equipping shared spaces and meeting rooms for video conferencing with remote participants. Video conferencing and collaboration solutions are an integral part of the changing office environment.

The Rise of Artificial Intelligence:

•Automation through AI solutions is driving improved customer and employee experiences. Conversational AI infused in contact center solutions will improve operational efficiencies and customer experiences leading to accelerated contact center platform replacements. AI enhancements also improve the meeting and collaboration experience between in-person and remote meeting participants. Video applications are increasingly being infused with virtual assistants, smart transcription and translation, and facial recognition.

•Extreme automation is fueling simplicity. Although the enabling technologies in our sector are becoming more complex, their use in contact center applications is driving increased simplicity for organizations and their employees. Simplicity in operations, engagement, customer intelligence and customer experience form the root of the innovation happening in our space.

Growth of the Experience Economy:

•The experience economy continues to grow. The experience economy is based on the concept that experience is a key source of value — it is a differentiator that creates a competitive advantage for products and services. As consumers embrace new technologies and devices in creative ways and at an accelerating pace, Avaya is continuing to invest in AI-powered solutions delivered through cloud and subscription 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 CC and UCC solutions that improve the customer experience and transform the digital workplace communications and workflows.

Russia/Ukraine Conflict

The military operation launched by Russia against Ukraine created economic and security concerns that have had and will likely continue to have an impact on regional and global economies and, in turn, our business. Sanctions and other retaliatory measures against Russia have been taken, and could be taken in the future, by the U.S., EU (as defined herein) and other jurisdictions which severely limit our ability to conduct commercial activities with Russian companies, organizations and individuals on the U.S.'s List of Specially Designated Nationals, some of which are Avaya customers. Under current restrictions we cannot provide certain services to customers in Russia, and as a result, as we comply with all applicable sanctions, we are unable to fulfill certain of our existing contractual obligations to customers in Russia, nor can we commence new maintenance and support arrangements in Russia. The conflict and related retaliatory measures have had, and will continue to have, a negative effect on revenue in Russia for the foreseeable future. Revenue from Russia during the three months ended December 31, 2022 was $2 million, compared to revenue of $17 million during the three months ended December 31, 2021. Prolonged hostilities could exacerbate the overall effects of the conflict on our Company, both in Russia and in other markets where we do business.

Although the Company's financial results were not materially impacted by the conflict and related retaliatory measures during the three months ended March 31, 2022, the Company expects that they will have a negative effect during the remainder of fiscal 2022 of approximately $45 million on anticipated revenue in Russia and, as companies in EMEA (other than Russia) shift priorities, an additional $15 million across EMEA. However, prolonged hostilities could exacerbate the overall effects of the conflict on our Company, both in that region and in other markets where we do business.38

Coronavirus ("COVID-19") Update

The COVID-19 pandemic has had widespread and unprecedented 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 pandemic on our business, 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.

Our focus throughout the pandemic has been and remains on promoting employee health and safety, serving our customers and ensuring business 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.

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Effects of Inflation

The Company’s operations expose it to the effects of inflation. Inflation has become a significant factor in the world economy post-pandemic and has led to an increased interest rate environment as well as inflationary pressures on the Company’s operations, including but not limited to increased labor and finance costs.

Financial Results Summary

The following table displays our consolidated net loss for the three months ended December 31, 2022 and 2021:

	Three months endedMarch 31,				Six months endedMarch 31,
	Three months endedDecember 31,
(In millions)	2022		2021		~~2022~~		~~2021~~
REVENUE
Products	$	~~223~~136	$	~~226~~231	$	~~454~~	$	~~492~~
Services	~~493~~282		~~512~~482		~~975~~		~~989~~
	716		738		1,429		1,481
	418		713
COSTS
Products:
Costs	~~119~~70		92111		~~230~~		~~197~~
Amortization of technology intangible assets	35		4342		77		86
Services	~~191~~165		191		~~382~~		~~370~~
	345		326		689		653
	270		344
GROSS PROFIT	~~371~~148		~~412~~369		~~740~~		~~828~~
OPERATING EXPENSES
Selling, general and administrative	~~245~~221		~~264~~262		~~507~~		~~519~~
Research and development	6050		5761		~~121~~		~~112~~
Amortization of intangible assets	4039		3940		80		79
Restructuring charges, net	3		8		10		12
Impairment charges	9		—
	348		368		718		722
Restructuring charges, net	10		7
OPERATING INCOME	23		44		22		106
	329		370
Interest expense	(54)		(59)		(108)		(115)
OPERATING LOSS	(181)		(1)
Other income, net	17		1		24		1
Interest expense	(5)		(54)
LOSS BEFORE INCOME TAXES	(14)		(14)		(62)		(8)
Other (expense) income, net	(4)		7
Benefit from (provision for) income taxes	13		(44)		(5)		(54)
LOSS BEFORE INCOME TAXES	(190)		(48)
NET LOSS	$	(1)	$	(58)	$	(67)	$	(62)
Benefit from (provision for) income taxes	26		(18)
NET LOSS	$	(164)	$	(66)

Three months ended ~~March~~December 31, 2022 compared with the Three months ended ~~March~~December 31, 2021

Revenue

Revenue for the three months ended ~~March~~December 31, 2022 was $~~716~~418 million compared to $~~738~~713 million for the three months ended ~~March~~December 31, 2021. The decrease was primarily driven by the cumulative effect of the continuing shift away from on-premise product solutions, and the associated ~~hardware~~ maintenance, software support services and professional services, to subscription and cloud-based solutions; lower revenue from hardware products; the ~~Company's~~negative ~~OneCloud~~impact ~~portfolio~~from ~~(including~~various ~~OneCloud~~sanctions ~~subscription~~and ~~hybrid)~~other retaliatory measures against Russia resulting from the Russia/Ukraine conflict; and the unfavorable impact of foreign currency exchange rates,. ~~partially~~In ~~offset~~addition, ~~by higher revenue from~~ the Company's ~~OneCloud~~ subscription ~~hybrid~~revenue ~~offering;~~declined adue ~~significant~~to ~~perpetual~~lower ~~license~~rates ~~sale~~of ~~with~~migrations aand ~~government~~shorter ~~agency~~contract indurations. ~~the~~The ~~current~~decrease ~~period;~~was ~~higher~~partially ~~cloud~~offset ~~revenue;~~by ~~and~~ higher revenue from ~~hardware~~the ~~products~~Company's public and private cloud offerings.

					Percentage of Total Revenue				Yr. to Yr. Percentage Change		Yr. to Yr. Percentage Change, net of Foreign Currency Impact
	Three months endedMarch 31,				Three months endedMarch 31,
(In millions)	2022		2021		2022		2021
Products & Solutions	$	223	$	226	31	%	31	%	(1)	%	(1)	%
Services	493		513		69	%	69	%	(4)	%	(3)	%
Unallocated amounts	—		(1)		—	%	—	%	(1)		(1)
Total revenue	$	716	$	738	100	%	100	%	(3)	%	(2)	%

(1)Not meaningful.

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The following table displays revenue and the percentage of revenue to total sales by operating segment for the periods indicated:

Products & Solutions revenue for the three months ended March 31, 2022 was $223 million compared to $226 million for the three months ended March 31, 2021. The decrease was primarily driven by the continuing shift away from on-premise product solutions to the Company's OneCloud portfolio, partially offset by a significant perpetual license sale with a government agency in the current period; higher cloud revenue; and higher revenue from hardware products.


					Percentage of Total Revenue				Yr. to Yr. Percentage Change		Yr. to Yr. Percentage Change, net of Foreign Currency Impact
	Three months ended December 31,				Three months ended December 31,
(In millions)	2022		2021		2022		2021
Products & Solutions	$	136	$	231	33	%	32	%	(41)	%	(40)	%
Services	282		482		67	%	68	%	(41)	%	(39)	%

Total revenue	$	418	$	713	100	%	100	%	(41)	%	(39)	%

~~Services~~Products & Solutions revenue for the three months ended ~~March~~December 31, 2022 was $~~493~~136 million compared to $~~513~~231 million for the three months ended ~~March~~December 31, 2021. The decrease was primarily driven by ~~anticipated declines in hardware maintenance, software support services and professional services which continue to face headwinds driven by~~ the continuing shift away from on-premise product solutions to the Company's ~~OneCloud~~subscription ~~portfolio;~~ and ~~the~~cloud ~~fulfillment~~portfolio; oflower ~~certain~~revenue ~~obligations~~from ~~related~~hardware toproducts; aand ~~government contract in~~ the ~~prior~~unfavorable ~~period,~~impact ~~partially~~of ~~offset~~foreign bycurrency ~~higher~~exchange ~~revenue from the Company's OneCloud subscription hybrid offering~~rates.

~~Unallocated~~Services ~~amounts~~revenue for the three months ended ~~March~~December 31, ~~2021~~2022 ~~represent~~was $282 million compared to $482 million for the ~~fair~~three ~~value~~months ~~adjustment~~ended toDecember ~~deferred~~31, ~~revenue~~2021. ~~recognized~~The ~~upon~~decrease ~~emergence~~was ~~from~~primarily ~~bankruptcy~~driven by declines in ~~December~~hardware ~~2017~~maintenance, software support services and professional services which iscontinue ~~excluded~~to face headwinds driven by the cumulative effect of the continuing shift away from ~~segment~~on-premise product solutions to the Company's subscription and cloud portfolio; and the unfavorable impact of foreign currency exchange rates. In addition, the Company's subscription revenue declined due to lower rates of migrations and shorter contract durations. The decrease was partially offset by higher revenue from the Company's public and private cloud offerings.

The following table displays revenue and the percentage of revenue to total sales by location for the periods indicated:

					Percentage of Total Revenue				Yr. to Yr. Percentage Change		Yr. to Yr. Percentage Change, net of Foreign Currency Impact
	Three months endedMarch 31,				Three months endedMarch 31,
	Three months endedDecember 31,				Three months endedDecember 31,
(In millions)	2022		2021		2022		2021
U.S.	$	~~422~~208	$	~~413~~375	5950	%	5653	%	2(45)	%	2(45)	%
International:
Europe, Middle East and Africa	~~175~~109		~~187~~192		2526	%	2527	%	(643)	%	(338)	%
Asia Pacific	6756		7781		913	%	11	%	(1331)	%	(1127)	%
Americas International - Canada and Latin America	5245		6165		711	%	89	%	(1531)	%	(1728)	%
Total international	294		325		41	%	44	%	(10)	%	(7)	%
Total International	210		338		50	%	47	%	(38)	%	(34)	%
Total revenue	$	716	$	738	100	%	100	%	(3)	%	(2)	%
Total Revenue	$	418	$	713	100	%	100	%	(41)	%	(39)	%

Revenue in the U.S. ~~was $422 million~~ for the three months ended ~~March~~December 31, 2022 was $208 million compared to $~~413~~375 million for the three months ended ~~March~~December 31, 2021. The ~~increase~~decrease in the U.S. was ~~primarily~~mainly ~~attributable~~driven toby ~~higher~~the ~~revenue~~continuing shift away from ~~the~~on-premise ~~Company's~~product ~~OneCloud~~solutions, ~~subscription~~and ~~hybrid~~the ~~offering;~~associated amaintenance, ~~significant~~software ~~perpetual~~support ~~license~~services ~~sale~~and ~~with~~professional aservices, ~~government~~to ~~agency;~~subscription ~~higher~~and cloud-based ~~revenue~~solutions; and ~~higher~~lower revenue from hardware products. In addition, ~~partially~~the ~~offset~~Company's bysubscription revenue declined due to lower ~~revenue~~rates ~~from~~of ~~the~~migrations ~~continuing~~and ~~shift~~shorter ~~away~~contract ~~from~~durations. ~~on-premise~~The ~~product~~decrease ~~solutions~~was ~~and~~partially ~~the~~offset ~~associated~~by ~~hardware~~higher ~~maintenance,~~revenue ~~software~~from ~~support~~the ~~services~~Company's public and ~~professional~~private ~~services.~~cloud offerings.

Revenue in Europe, Middle East and Africa ("EMEA") for the three months ended ~~March~~December 31, 2022 was $~~175~~109 million compared to $~~187~~192 million for the three months ended ~~March~~December 31, 2021. The decrease in EMEA was mainly driven by the continuing shift away from on-premise product solutions, and the associated hardware maintenance, ~~and~~ software support services and professional services, to subscription and cloud-based solutions; lower revenue from hardware products; the negative impact from various sanctions and other retaliatory measures against Russia resulting from the Russia/Ukraine conflict; and the unfavorable impact of foreign currency exchange rates,. ~~partially~~In ~~offset~~addition, bythe ~~higher~~Company's subscription revenue ~~from~~declined ~~the~~due ~~Company's~~to ~~OneCloud~~lower ~~subscription~~rates ~~hybrid~~of ~~offering~~migrations and shorter contract durations.

Revenue in Asia Pacific ("APAC") for the three months ended ~~March~~December 31, 2022 was $6756 million compared to $7781 million for the three months ended ~~March~~December 31, 2021. The decrease in APAC revenue was mainly driven by the continuing shift away from on-premise product solutions, and the associated hardware maintenance, ~~and~~ software support services and professional services, to subscription and cloud-based solutions; lower revenue from hardware products; and to the unfavorable impact of foreign currency exchange rates,. ~~partially~~In ~~offset~~addition, bythe ~~higher~~Company's subscription revenue ~~from~~declined ~~the~~due ~~Company's~~to ~~OneCloud~~lower ~~subscription~~rates ~~hybrid~~of ~~offering~~migrations and shorter contract durations.

Revenue in Americas International for the three months ended March 31, 2022 was $52 million compared to $61 million for the three months ended March 31, 2021. The decrease in Americas International revenue was primarily driven by lower revenue from professional services and the continuing shift away from on-premise product solutions and the associated hardware maintenance and software support services, partially offset by higher revenue from the Company's OneCloud subscription hybrid offering and the favorable impact of foreign currency exchange rates. 40

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Revenue in Americas International for the three months ended December 31, 2022 was $45 million compared to $65 million for the three months ended December 31, 2021. The decrease in Americas International revenue was mainly driven by the continuing shift away from on-premise product solutions, and the associated hardware maintenance, software support services and professional services, to subscription and cloud-based solutions; lower revenue from hardware products; and to the unfavorable impact of foreign currency exchange rates. In addition, the Company's subscription revenue declined due to lower rates of migrations and shorter contract durations.

Gross Profit

The following table sets forth gross profit and gross margin by operating segment for the periods indicated:

					Gross Margin				Change
	Three months endedMarch 31,				Three months endedMarch 31,
	Three months endedDecember 31,				Three months endedDecember 31,
(In millions)	2022		2021		2022		2021		Amount		Percent
Products & Solutions	$	~~104~~66	$	~~134~~120	4648.65	%	5951.39	%	$	(3054)	(2245)	%
Services	~~302~~117		~~322~~291		6141.35	%	6260.84	%	(20174)		(660)	%
Unallocated amounts	(35)		(4442)		(1)		(1)		97		(1)
Total	$	~~371~~148	$	~~412~~369	5135.84	%	5551.8	%	$	(41221)	(1060)	%

(1)Not meaningful.

Products & Solutions gross profit for the three months ended ~~March~~December 31, 2022 was $~~104~~66 million compared to $~~134~~120 million for the three months ended ~~March~~December 31, 2021. The decrease was mainly attributable to the decline in revenue described above. Products & Solutions gross margin ~~decreased~~decrease from 5951.39% for the three months ended ~~March~~December 31, 2021 to 4648.65% for the three months ended ~~March~~December 31, 2022. The decrease in margin was attributable to a less favorable product mix including a higher proportion of revenue from hardware ~~sales~~ as the consumption of higher margin software continues to shift to a subscription model, which is reflected within our Services segment; higher freight and material costs as a result of supply chain pressures; and higher third party expenses, including costs associated with the perpetual license sale to a government agency.

Services gross profit for the three months ended ~~March~~December 31, 2022 was $~~302~~117 million compared to $~~322~~291 million for the three months ended ~~March~~December 31, 2021. The decrease was mainly driven by the decline in revenue described above. Services gross margin decreased from 6260.84% for the three months ended ~~March~~December 31, 2021 to 6141.35% for the three months ended ~~March~~December 31, 2022. The decrease in margin was mainly driven by anlower ~~increase~~subscription inrevenues, ~~costs~~the ~~associated~~cumulative ~~with~~effect ~~a higher mix~~ of ~~cloud and partner offerings and~~ the ~~unfavorable~~decline ~~impact~~in of higher ~~margins~~margin ~~associated~~software ~~with~~support aservices ~~government~~and ~~contract~~a inhigher ~~the~~mix ~~prior~~of ~~period,~~lower ~~partially~~margin ~~offset~~cloud byand ~~the~~partner ~~increase in revenue from the Company's OneCloud subscription hybrid offering~~offerings.

Unallocated amounts for the three months ended ~~March~~December 31, 2022 and 2021 include the amortization of technology intangible assets and 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 Revenue				Change
	Three months endedMarch 31,				Three months endedMarch 31,
	Three months endedDecember 31,				Three months endedDecember 31,
(In millions)	2022		2021		2022		2021		Amount		Percent
Selling, general and administrative	$	~~245~~221	$	~~264~~262	3452.29	%	3536.87	%	$	(1941)	(716)	%
Research and development	6050		5761		812.40	%	78.76	%	3(11)		5(18)	%
Amortization of intangible assets	4039		3940		59.63	%	5.36	%	(1)		(3)	%
Restructuring charges, net	3		8		0.4	%	1.1	%	(5)		(63)	%
Impairment charges	9		—		2.2	%	—	%	9		n/a
Total operating expenses	$	348	$	368	48.6	%	49.9	%	$	(20)	(5)	%
Restructuring charges, net	10		7		2.4	%	1.0	%	3		43	%
Total operating expenses	$	329	$	370	78.8	%	51.9	%	$	(41)	(11)	%

Selling, general and administrative expenses for the three months ended ~~March~~December 31, 2022 were $~~245~~221 million compared to $~~264~~262 million for the three months ended ~~March~~December 31, 2021. The decrease was primarily attributable to lower ~~channel~~third ~~compensation;~~party, lower ~~accrued~~employee ~~incentive~~related expenses, and lower marketing and advertisement costs driven by the cost cutting initiatives undertaken beginning in fiscal 2022. The decrease was also attributable to lower stock compensation; expense and the favorable impact of foreign currency exchange rates,. The decrease was partially offset by ~~higher~~advisory ~~investment~~fees in ~~cloud~~the ~~go-~~current period to~~-market.~~ assist in the assessment of strategic and financial alternatives to improve the Company's capital structure.

Research and development expenses for the three months ended March 31, 2022 were $60 million compared to $57 million for the three months ended March 31, 2021. The increase was primarily attributable to investments in cloud technology development, partially offset by lower accrued incentive compensation.41

Amortization of intangible assets for three months ended March 31, 2022 were $40 million compared to $39 million for three months ended March 31, 2021.

Restructuring charges, net were $3 million for the three months ended March 31, 2022 compared to $8 million for the three months ended March 31, 2021. Restructuring charges during the three months ended March 31, 2022 consisted of $1 million for facility exit costs and $2 million for employee separation actions primarily in the U.S. Restructuring charges for the three

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Research and development expenses for the three months ended ~~March~~December 31, ~~2021~~2022 ~~consisted~~were of$50 million compared to $761 million for ~~facility~~the ~~exit~~three ~~costs~~months ~~and~~ended $1December ~~million~~31, ~~for~~2021. The decrease was primarily attributable to lower third party and employee ~~separation~~related ~~actions~~expenses indriven by the ~~U.S.~~cost cutting initiatives undertaken beginning in fiscal 2022.

~~Operating~~Amortization ~~Income~~of intangible assets for three months ended December 31, 2022 were $39 million compared to $40 million for three months ended December 31, 2021.

~~Operating~~Impairment ~~income~~charges for ~~the~~ three months ended ~~March~~December 31, 2022 ~~was~~were $239 million, ~~compared~~consisting toof a $449 million ~~for~~indefinite-lived ~~the~~intangible ~~three~~asset ~~months~~impairment ~~ended~~charge. ~~March~~The ~~31,~~Company ~~2021.~~concluded ~~Our~~that ~~operating~~a ~~results~~triggering ~~for~~event occurred during the three months ended ~~March~~December 31, 2022 as ~~compared~~the Company was unable to reach an out-of-court resolution with certain holders of the ~~three~~Convertible ~~months~~Notes, ~~ended~~Senior ~~March~~Notes, 31Exchangeable Notes, ~~2021~~and ~~reflect~~the Term Loans outstanding under the Term Loan Credit Agreement, ~~among~~regarding ~~other~~one ~~things~~or more potential financings, refinancing, recapitalizations, reorganizations, restructurings, or investment transactions involving the ~~following~~Company. ~~items~~As ~~which~~a ~~are~~result, ~~described~~the Company performed an interim quantitative indefinite-lived intangible asset impairment test as of December 31, 2022. The results of the Company's impairment test indicated that the carrying amount of the Company's indefinite-lived intangible asset, the Avaya Trade Name, exceeded its estimated fair value primarily due to a reduction in ~~more~~the ~~detail~~Company's ~~above:~~revenue in its updated outlook.

~~•lower~~Restructuring ~~revenue~~charges, ~~and~~net ~~gross~~were ~~profit~~$10 million for the three months ended ~~March~~December 31, 2022; ~~partially~~compared ~~offset~~to by$7 million for the three months ended December 31, 2021. Restructuring charges during the three months ended December 31, 2022 consisted of $8 million for employee separation actions primarily in the U.S. and EMEA, and $2 million for facility exit costs as the Company optimizes its real-estate footprint. Restructuring charges for the three months ended December 31, 2021 consisted of $5 million for facility exit costs and $2 million for employee separation actions primarily in the U.S. and EMEA. The Company anticipates additional restructuring charges in fiscal 2023 in connection with the cost-cutting actions described above.

~~•lower~~Operating ~~selling, general and administrative costs for the three months ended March 31, 2022.~~Loss

Operating loss for the three months ended December 31, 2022 was $181 million compared to an operating loss of $1 million for the three months ended December 31, 2021. Our operating results for the three months ended December 31, 2022 as compared to the three months ended December 31, 2021 reflect, among other things, the following items which are described in more detail above:

•lower revenue and gross profit for the three months ended December 31, 2022; and

•lower selling, general and administrative and research and development costs for the three months ended December 31, 2022.

Interest Expense

Interest expense for the three months ended ~~March~~December 31, 2022 was $545 million compared to $5954 million for the three months ended ~~March~~December 31, 2021. The decrease was ~~mainly~~primarily ~~driven~~attributable byto ~~lower~~the ~~average~~settlement ~~principal~~of ~~amounts~~the ~~outstanding, lower average~~ interest ~~rates~~rate swaps and ~~debt issuance costs incurred in~~ the ~~prior~~adoption ~~period~~of asASU a2020-06; ~~result~~offset ofby ~~the~~an ~~Company's~~increase ~~Term~~in ~~Loan~~LIBOR ~~Credit~~rates ~~Agreement~~and ~~amendment during~~ the ~~three~~issuance ~~months~~of ~~ended~~the ~~March~~Exchangeable 31Notes, ~~2021,~~and ~~described~~the inassociated ~~Note~~embedded 7,derivatives ~~“Financing~~during ~~Arrangements”,~~the tofourth ~~our~~quarter ~~unaudited~~of ~~interim~~the ~~Condensed~~fiscal ~~Consolidated Financial Statements~~2022.

Other (Expense) Income, Net

Other (expense) income, net for the three months ended ~~March~~December 31, 2022 was $17(4) million compared to $17 million for the three months ended ~~March~~December 31, 2021. The ~~increase~~decrease was mainly driven by the ~~change~~decrease in ~~fair~~other ~~value~~pension ofand ~~the~~post-retirement ~~Emergence~~benefit ~~Date~~credits ~~Warrants,~~and ~~partially~~an ~~offset~~increase byin aforeign ~~non-cash~~currency ~~settlement~~losses, ~~gain~~partially ~~recorded~~offset ~~during~~by ~~the~~an ~~three~~increase ~~months~~in ~~ended~~interest ~~March~~income ~~31,~~during ~~2021 related to~~ the ~~Company's~~current ~~other post-retirement plan~~period.

Benefit from (Provision for) Income Taxes

The benefit from income taxes was $1326 million for the three months ended ~~March~~December 31, 2022 compared to a provision for income taxes of $4418 million for the three months ended ~~March~~December 31, 2021.

The Company's effective income tax rate for the three months ended ~~March~~December 31, 2022 differed from the U.S. federal tax rate by 727% or $10 14 million principally related to ~~the release of reserves from statute of limitation expirations,~~ 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 and ~~nondeductible~~the ~~expenses~~release of deferred taxes from Accumulated Other Comprehensive Income upon termination of interest rate swaps.

The Company's effective income tax rate for the three months ended ~~March~~December 31, 2021 differed from the U.S. federal tax rate by ~~335~~59% or $4728 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; and nondeductible expenses.

~~Net Loss~~42

Net loss was $1 million for the three months ended March 31, 2022 compared to a net loss of $58 million for the three months ended March 31, 2021 as a result of the items discussed above.

Six months ended March 31, 2022 compared with the Six months ended March 31, 2021

Revenue

Revenue for the six months ended March 31, 2022 was $1,429 million compared to $1,481 million for the six months ended March 31, 2021. The decrease was primarily driven by the continuing shift away from on-premise product solutions, and the associated hardware maintenance, software support services and professional services, to the Company's OneCloud portfolio (including OneCloud subscription hybrid) and the unfavorable impact of foreign exchange rates. The decrease was partially offset by higher revenue from the Company's OneCloud subscription hybrid offering; a significant perpetual license sale with a government agency in the current period; higher cloud revenue; and higher revenue from hardware products.

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					Percentage of Total Revenue				Yr. to Yr. Percentage Change		Yr. to Yr. Percentage Change, net of Foreign Currency Impact
	Six months endedMarch 31,				Six months endedMarch 31,
(In millions)	2022		2021		2022		2021
Products & Solutions	$	454	$	492	32	%	33	%	(8)	%	(7)	%
Services	975		990		68	%	67	%	(2)	%	(1)	%
Unallocated amounts	—		(1)		—	%	—	%	(1)		(1)
Total revenue	$	1,429	$	1,481	100	%	100	%	(4)	%	(3)	%

(1)Not meaningful.

Products & Solutions revenue for the six months ended March 31, 2022 was $454 million compared to $492 million for the six months ended March 31, 2021. The decrease was primarily attributable to the continuing shift away from on-premise product solutions to the Company's OneCloud portfolio and the unfavorable impact of foreign currency exchange rates, partially offset by a significant perpetual license sale with a government agency in the current period; higher cloud revenue; and higher revenue from hardware products.

Services revenue for the six months ended March 31, 2022 was $975 million compared to $990 million for the six months ended March 31, 2021. The decrease was primarily driven by anticipated declines in hardware maintenance, software support services and professional services which continue to face headwinds driven by the continuing shift away from on-premise product solutions to the Company's OneCloud portfolio and the unfavorable impact of foreign currency exchange rates, partially offset by higher revenue from the Company's OneCloud subscription hybrid offering.

Unallocated amounts for the six months ended March 31, 2021 represent the fair value adjustment to deferred revenue recognized upon emergence from bankruptcy in December 2017 which is excluded from segment revenue.

					Percentage of Total Revenue				Yr. to Yr. Percentage Change		Yr. to Yr. Percentage Change, net of Foreign Currency Impact
	Six months endedMarch 31,				Six months endedMarch 31,
(In millions)	2022		2021		2022		2021
U.S.	$	797	$	827	56	%	56	%	(4)	%	(4)	%
International:
Europe, Middle East and Africa	367		382		26	%	26	%	(4)	%	(2)	%
Asia Pacific	148		152		10	%	10	%	(3)	%	(1)	%
Americas International - Canada and Latin America	117		120		8	%	8	%	(3)	%	(3)	%
Total international	632		654		44	%	44	%	(3)	%	(2)	%
Total revenue	$	1,429	$	1,481	100	%	100	%	(4)	%	(3)	%

Revenue in the U.S. was $797 million for the six months ended March 31, 2022 compared to $827 million for the six months ended March 31, 2021. The decrease in the U.S. was driven by the continuing shift away from on-premise product solutions and the associated hardware maintenance, software support services and professional services, partially offset by higher revenue from the Company's OneCloud subscription hybrid offering; a significant perpetual license sale with a government agency in the current period; higher cloud revenue; and higher revenue from hardware products.

Revenue in Europe, Middle East and Africa ("EMEA") for the six months ended March 31, 2022 was $367 million compared to $382 million for the six months ended March 31, 2021. The decrease in EMEA was mainly driven by the continuing shift away from on-premise product solutions and the 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 hybrid offering.

Revenue in Asia Pacific ("APAC") for the six months ended March 31, 2022 was $148 million compared to $152 million for the six months ended March 31, 2021. The decrease in APAC revenue was mainly driven by the continuing shift away from on-premise product solutions and the 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 hybrid offering.

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Revenue in Americas International for the six months ended March 31, 2022 was $117 million compared to $120 million for the six months ended March 31, 2021. The decrease in Americas International revenue was primarily driven by lower revenue from professional services and the continuing shift away from on-premise product solutions and the associated hardware maintenance and software support services, partially offset by higher revenue from the Company's OneCloud subscription hybrid offering.

Gross Profit

					Gross Margin				Change
	Six months endedMarch 31,				Six months endedMarch 31,
(In millions)	2022		2021		2022		2021		Amount		Percent
Products & Solutions	$	224	$	295	49.3	%	60.0	%	$	(71)	(24)	%
Services	593		620		60.8	%	62.6	%	(27)		(4)	%
Unallocated amounts	(77)		(87)		(1)		(1)		10		(1)
Total	$	740	$	828	51.8	%	55.9	%	$	(88)	(11)	%

(1)Not meaningful.

Products & Solutions gross profit for the six months ended March 31, 2022 was $224 million compared to $295 million for the six months ended March 31, 2021, Products & Solutions gross margin decreased from 60.0% for the six months ended March 31, 2021 to 49.3% for the six months ended March 31, 2022. The decrease was mainly driven by a less favorable product mix including a higher proportion of hardware sales as the consumption of higher margin software continues to shift to a subscription model, which is reflected within our Services segment; higher freight and material costs as a result of supply chain pressures; and higher third party expenses, including costs associated with the perpetual license sale to a government agency.

Services gross profit for the six months ended March 31, 2022 was $593 million compared to $620 million for the six months ended March 31, 2021. Services gross margin decreased from 62.6% for the six months ended March 31, 2021 to 60.8% for the six months ended March 31, 2022. The decrease was mainly driven by an increase in costs associated with a higher mix of cloud and partner offerings, partially offset by the increase in revenue from the Company's OneCloud subscription hybrid offering.

Unallocated amounts for the six months ended March 31, 2022 and 2021 include the amortization of technology intangible assets and fair value adjustments recognized upon emergence from bankruptcy which are excluded from segment gross profit.

Operating Expenses

					Percentage of Total Revenue				Change
	Six months endedMarch 31,				Six months endedMarch 31,
(In millions)	2022		2021		2022		2021		Amount		Percent
Selling, general and administrative	$	507	$	519	35.5	%	35.0	%	$	(12)	(2)	%
Research and development	121		112		8.4	%	7.6	%	9		8	%
Amortization of intangible assets	80		79		5.6	%	5.3	%	1		1	%
Restructuring charges, net	10		12		0.7	%	0.8	%	(2)		(17)	%
Total operating expenses	$	718	$	722	50.2	%	48.7	%	$	(4)	(1)	%

Selling, general and administrative expenses for the six months ended March 31, 2022 were $507 million compared to $519 million for the six months ended March 31, 2021. The decrease was primarily attributable to lower accrued incentive compensation; the favorable impact of foreign currency exchange rates; lower channel compensation; and lower facility related costs, partially offset by higher investment in cloud go-to-market, travel expenses, and employee benefit costs.

Research and development expenses for the six months ended March 31, 2022 were $121 million compared to $112 million for the six months ended March 31, 2021. The increase was primarily attributable to investments in cloud technology development, partially offset by lower accrued incentive compensation.

Amortization of intangible assets were $80 million for the six months ended March 31, 2022 and $79 million for the six months ended March 31, 2021.

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Restructuring charges, net were $10 million for the six months ended March 31, 2022 compared to $12 million for the six months ended March 31, 2021. Restructuring charges during the six months ended March 31, 2022 consisted of $6 million for facility exit costs and $4 million for employee separation actions primarily in the U.S. and EMEA. Restructuring charges for 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.

Operating Income

Operating income for the six months ended March 31, 2022 was $22 million compared to $106 million for the six months ended March 31, 2021. Our operating results for the six months ended March 31, 2022 as compared to the six months ended March 31, 2021 reflect, among other things, the following items which are described in more detail above:

•lower revenue and gross profit for the six months ended March 31, 2022;

•higher research and development costs for the six months ended March 31, 2022; and

•lower selling, general and administrative costs for the six months ended March 31, 2022

Interest Expense

Interest expense for the six months ended March 31, 2022 was $108 million compared to $115 million for the six months ended March 31, 2021. The decrease was mainly driven by lower average principal amounts outstanding, lower average interest rates and debt issuance costs incurred in the prior period as a result of the Company's Term Loan Credit Agreement amendment during the six months ended March 31, 2021, described in Note 7, “Financing Arrangements,” to our unaudited interim Condensed Consolidated Financial Statements.

Other Income, Net

Other income, net for the six months ended March 31, 2022 was $24 million compared to $1 million for the six months ended March 31, 2021. The increase was mainly driven by the change in fair value of the Emergence Date Warrants, 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.

Provision for Income Taxes

The provision for income taxes was $5 million for the six months ended March 31, 2022 compared to a provision for income taxes of $54 million for the six months ended March 31, 2021.

The Company's effective income tax rate for the six months ended March 31, 2022 differed from the U.S. federal tax rate by 29% or $18 million principally related to 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 release of reserves from statute of limitation expirations, and nondeductible expenses.

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.

Net Loss

Net loss was $67164 million for the ~~six~~three months ended ~~March~~December 31, 2022 compared to a net loss of $6266 million for the ~~six~~three months ended ~~March~~December 31, 2021 as a result of the items discussed above.

Liquidity and Capital Resources

WeThe ~~expect~~accompanying ~~our~~unaudited ~~existing~~Condensed ~~cash~~Consolidated ~~balance~~Financial ~~and~~Statements ~~borrowings available under our ABL Credit Agreement to be our primary sources~~ of ~~short-term~~the ~~liquidity.~~Company ~~Our~~have ~~ability~~been toprepared ~~meet~~assuming ~~our~~the ~~cash~~Company ~~requirements~~ will ~~depend~~continue onas ~~our~~a ~~ability~~going toconcern ~~generate~~and ~~cash~~ in ~~the~~accordance ~~future,~~with ~~which~~GAAP. isThe ~~subject~~going toconcern ~~general~~basis ~~economic,~~of ~~financial,~~presentation ~~competitive,~~assumes ~~legislative,~~that ~~regulatory~~the ~~and~~Company ~~other~~will ~~factors~~continue ~~that~~in ~~are~~operation ~~beyond~~one ~~our~~year ~~control.~~after ~~Based~~the ondate ~~our~~these ~~current~~Condensed ~~level~~Consolidated ofFinancial ~~operations,~~Statements weare ~~believe~~issued ~~these~~and ~~sources~~ will be ~~adequate~~able to ~~meet~~realize ~~our~~its ~~liquidity~~assets ~~needs~~and ~~for~~discharge atits ~~least~~liabilities ~~the~~and ~~next~~commitments ~~twelve~~in ~~months from~~ the ~~filing~~normal course of ~~this quarterly report on Form 10-Q~~business.

37During the fiscal year ended September 30, 2022, the Company experienced a significant slowdown in its operations and had operating cash outflows of $312 million. Additionally, prior to the Chapter 11 Cases, the Company had been involved in discussions with its lenders relating to the financing transactions it completed in July 2022 (as described further in Note 7, "Financing Arrangements") and the scheduled June 2023 maturity of the Convertible Notes. In its Form 12b-25 in respect of the Quarterly Report on Form 10-Q for the period ended June 30, 2022 filed with the SEC on August 9, 2022, the Company indicated that in light of the Convertible Notes being characterized as a current liability and the related engagement with advisors to address the Convertible Notes, coupled with the decline in revenues during the third quarter, which represented substantially lower revenues than previous Company expectations, and the negative impact of significant operating losses on the Company’s cash balance, the Company determined that there was substantial doubt about the Company’s ability to continue as a going concern.

~~Table~~The Company has completed certain restructuring actions and is working to complete its remaining restructuring plan as its operating cash flows are expected to remain negative through at least fiscal 2023. The Company may take additional actions, as needed. The Company’s plans are designed to reduce its operating expenses and improve cash flows in line with its forecasted revenues. On the Emergence Date, the Company had approximately $585 million of ~~Contents~~cash and cash equivalents, and its post-Emergence debt profile was significantly improved (an aggregate principal amount of $810 million compared to $3,420 million at December 31, 2022), reducing its annual interest expense and extending the earliest maturity of its non-revolving long-term debt to 2028. This post-Emergence capital structure, coupled with restructuring actions that the Company executed to reduce its on-going operating expenses, have provided the Company with sufficient working capital to meet its operating cash flow requirements for at least one year from the issuance of these financial statements. Accordingly, as a result of the successful Emergence, the Company has alleviated the substantial doubt that had previously existed regarding the Company's ability to continue as a going concern. The Company's longer term liquidity profile will depend on successfully implementing its strategic plan which includes enhancing its product offerings, successfully partnering with alliance companies and executing on remaining cost reductions.

Cash Flow Activity

The following table provides a summary of the statements of cash flows for the periods indicated:

	Six months endedMarch 31,
	Three months endedDecember 31,
(In millions)	2022		2021
Net cash (used for) provided by:
Operating activities	$	(~~113~~65)	$	24(111)
Investing activities	(5217)		(5327)
Financing activities	~~(8)~~54		(~~108~~5)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash	~~(1)~~2		3(1)
Net decrease in cash, cash equivalents, and restricted cash	(~~174~~26)		(~~134~~144)
Cash, cash equivalents, and restricted cash at beginning of period	~~502~~478		~~731~~502
Cash, cash equivalents, and restricted cash at end of period	$	328	$	597
Cash, cash equivalents, and restricted cash at end of period(1)	$	452	$	358

(1)Includes $227 million and $4 million of restricted cash for three months ended December 31, 2022 and 2021, respectively.

Operating Activities

Cash used for operating activities for the ~~six~~three months ended ~~March~~December 31, 2022 was $~~113~~65 million compared to ~~cash provided by operating activities of~~ $24111 million ~~for~~three ~~the six~~ months ended ~~March~~December 31, 2021. The change was primarily due to ~~the~~lower ~~timing~~incentive ofcompensation ~~customer cash~~ payments ~~as the Company continues its transition to a cloud and subscription model and lower cash earnings~~, ~~partially offset by~~ $5240 million of net proceeds received from the ~~restructuring~~termination of the Company's New Forward Swap Agreements ~~which is~~ described ~~within~~in Note 8, "Derivative Instruments and Hedging Activities," to our unaudited interim Condensed Consolidated Financial Statements and ~~lower~~the ~~contributions~~timing toof customer cash payments as the Company's ~~pension~~continues its transition to a cloud and ~~post-retirement~~subscription ~~benefit~~model, ~~plans.~~offset by

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lower cash earnings and higher advisory fees associated with the assessment of strategic and financial alternatives to improve the Company's capital structure.

Investing Activities

Cash used for investing activities for the ~~six~~three months ended ~~March~~December 31, 2022 was $5217 million compared to $5327 million for the ~~six~~three months ended ~~March~~December 31, 2021 as a result of capital expenditures in each period.

Financing Activities

Cash ~~used~~provided ~~for~~by financing activities for the ~~six~~three months ended ~~March~~December 31, 2022 was $854 million compared to cash used for financing activities of $~~108~~5 million for the ~~six~~three months ended ~~March~~December 31, 2021. The change was primarily due to ~~repurchases~~net borrowings under the ABL Credit Agreement of $56 million during the three months ended December 31, 2022. The change was also driven by $7 million of shares repurchased and retired for tax withholdings on the vesting of ~~common~~restricted stock ~~under~~units ~~the~~and ~~Company's~~Stock ~~share~~Bonus ~~repurchase~~Program ~~program~~shares and aproceeds ~~principal~~of ~~repayment~~$4 ~~under~~million from the ~~Term~~Employee ~~Loan~~Stock ~~Credit~~Purchase ~~Agreement~~Plan during the ~~six~~three months ended ~~March~~December 31, 2021 with no comparable transactions in the current period. See Note 7, ~~offset~~"Financing byArrangements," ~~lower~~and ~~proceeds~~Note ~~from~~12, ~~the~~"Share-based ~~exercise~~Compensation," ofto ~~stock~~our ~~options~~unaudited ~~during~~interim ~~the~~Condensed ~~six~~Consolidated ~~months~~Financial ~~ended~~Statements ~~March~~for ~~31,~~additional ~~2022~~information.

Financing ~~Transactions~~Arrangements

OnSee ~~February~~Note 241, ~~2021,~~"Background ~~the~~and ~~Company~~Basis ~~amended~~of ~~its~~Presentation," ~~Term~~Note ~~Loan~~7, ~~Credit~~"Financing ~~Agreement~~Arrangements," ~~pursuant~~and Note 19, "Subsequent Events," to ~~which~~our ~~the~~unaudited ~~Company~~interim ~~prepaid,~~Condensed ~~replaced~~Consolidated ~~and~~Financial ~~refinanced~~Statements ~~all~~for ~~first~~additional ~~lien~~information ~~term~~regarding ~~loans~~the ~~due~~Company's ~~December~~Pre-Petition ~~2024~~Debt ~~outstanding~~Instruments, ~~under~~including the Term Loan Credit Agreement, ~~with~~the ~~$100~~ABL ~~million~~Credit inAgreement ~~cash~~the Senior Notes, the Convertible Notes and ~~$743~~the ~~million~~Exchangeable inNotes, ~~principal~~as ~~amount~~well as the DIP Term Loan Facility, the DIP ABL Facility and the effects of ~~new~~the ~~first~~Chapter ~~lien~~11 ~~term~~Cases ~~loans~~on ~~due~~the ~~December~~Pre-Petition ~~2027~~Debt Instruments.

See Note 7, “Financing Arrangements,” to our unaudited interim Condensed Consolidated Financial Statements for additional information regarding the Company’s Term Loan Credit Agreement.

On March 23, 2022, the Company restructured its interest rate swap agreements by terminating its existing Forward Swap Agreements, which fixed a portion of the variable rate interest due under the Company's Term Loan Credit Agreement from December 15, 2022 through December 15, 2024, and simultaneously entering into new interest rate swap agreements to extend its interest rate protection from December 15, 2024 to June 15, 2027. The new swap agreements fix a portion of the variable interest due under the Company's Term Loan Credit Agreement from December 15, 2022 through June 15, 2027. The Company received $52 million of net cash proceeds from the restructuring, and, as a result of the change in the interest rates underlying the swap agreements, the Company will make incremental interest payments between December 15, 2022 and December 15, 2024 that approximate the net proceeds received from the restructuring.

See Note 8, “Derivative Instruments and Hedging Activities,” to our unaudited interim Condensed Consolidated Financial Statements for additional information regarding the Company’s interest rate swap agreements.

As of March 31, 2022, 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. Inand ~~addition,~~bankruptcy wefiling stays payments. We may also use cash in the future to make strategic acquisitions or investments.

38In connection with the Company’s Emergence, our pre-petition debt was extinguished and we are currently operating under the Exit Term Loan and Exit ABL Loan and our interest expense will adjust in accordance with such facilities. We have no debt maturing in the near term.

~~Table~~In addition, the Company agreed to purchase seats of ~~Contents~~Avaya Cloud Office ("ACO") in the event certain volumes of ACO sales are not met over the term of its agreement with RingCentral, Inc. ("RingCentral"), which is described further in Note 18, "Commitments and Contingencies." In the event that the cumulative number of ACO seats sold as of the end of each calendar quarter is lower than the agreed upon threshold for such quarter, the Company will be required to purchase a number of ACO seats equal to such shortfall from RingCentral. Any such ACO seats purchased are subject to certain limitations and must be purchased for a two-year paid term with payments made monthly and pricing that is variable based on sales volumes by jurisdiction, contract size and product tier. The Company may resell such ACO seats to end customers or maintain them for internal use. In the event of any such requirement to purchase ACO seats, the required cash payments to RingCentral could have a significant adverse impact on the Company's financial position, results of operations and operating cash flows. Based on the variable nature of the commitment, the Company is not able to estimate the ultimate future cash flow impact, if any, of these increasing volume commitments.

~~Specifically~~In the ordinary course of business, wethe ~~expect~~Company is involved in litigation, claims, government inquiries, investigations and proceedings relating to intellectual property, commercial, employment, environmental and regulatory matters, including but not limited to a suit filed by Solaborate Inc. and Solaborate LLC described in Note 18, "Commitments and Contingencies," to our ~~primary~~unaudited ~~cash~~interim ~~requirements~~Condensed ~~for~~Consolidated Financial Statements. On February 3, 2023, the ~~remainder~~Company ofreached ~~fiscal~~an ~~2022~~agreement to besettle asthe ~~follows:~~lawsuit with Solaborate which will not have a material adverse effect on the Company's future cash requirements or cash flow.

•Debt service—We expect to make payments of approximately $94 million during the remainder of fiscal 2022 in interest associated with the Term Loan Credit Agreement, Senior Notes and Convertible Notes, 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 million for capital expenditures during the remainder of fiscal 2022.

•Benefit obligations—We estimate we will make payments under our pension and post-retirement benefit obligations of approximately $17 million during the remainder of fiscal 2022. These payments include $11 million for our non-U.S. benefit plans, which are predominantly not pre-funded, and $6 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 fiscal 2022. See discussion in Note 11, "Benefit Obligations," to our unaudited interim Condensed Consolidated Financial Statements for further details.

•Restructuring payments—We expect to make payments of approximately $10 million during the remainder of fiscal 2022 for employee separation costs associated with restructuring actions. The Company continues to evaluate opportunities to streamline its operations and identify additional cost savings globally.

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, including but not limited to a 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 could have a material adverse effect on the Company's future cash 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

WeOur ~~expect~~existing ~~our~~ cash balance and ~~borrowings~~proceeds ~~available~~from ~~under~~the ~~our~~Exit ~~ABL~~Term ~~Credit~~Loan ~~Agreement~~and toExit beABL Loan are our primary sources of ~~short-term~~future liquidity. As a result of the extinguishment of a significant amount of our debt in the Chapter 11 Cases, our annual interest expense was significantly reduced upon Emergence when compared to our pre-petition capital structure.

AsBoth ofthe ~~March 31,~~Exit ~~2022~~Term ~~and~~Loan ~~September 30, 2021, our cash~~ and ~~cash~~the ~~equivalent~~Exit ~~balances~~ABL ~~held~~Loan ~~outside~~include ~~the~~conditions ~~U.S.~~precedent, ~~were~~representations ~~$171 million~~ and ~~$195 million~~warranties, ~~respectively.~~affirmative Asand ofnegative ~~March 31~~covenants, ~~2022, the Company's cash~~ and ~~cash~~events ~~equivalents~~of ~~held~~default ~~outside~~customary ~~the~~for ~~U.S.~~financings ~~are~~of ~~not~~this ~~expected~~type toand besize. ~~needed~~See toNote be7, ~~repatriated~~"Financing toArrangements,” ~~fund~~for ~~the~~additional ~~Company's~~information ~~operations~~on in the ~~U.S.~~Exit ~~based~~Term onLoan ~~our~~and ~~expected~~the ~~future~~Exit ~~sources~~ABL ~~of liquidity~~Loan.

Under the terms of the ABL Credit Agreement, the Company can issue letters of credit up to $150 million. At March 31, 2022, the Company had issued and outstanding letters of credit and guarantees of $32 million under the ABL Credit Agreement and had no borrowings outstanding. The aggregate additional principal amount that may be borrowed under the ABL Credit Agreement, based on the borrowing base less $32 million of outstanding letters of credit and guarantees, was $118 million at March 31, 2022. 44

We believe that our existing cash and cash equivalents of $324 million as of March 31, 2022 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. Our cash flow from operations continues to be negatively impacted by our transition from an ownership model with an existing on-premise solution, to a usage model with our OneCloud portfolio. Customers purchasing a solution in our OneCloud portfolio generally pay cash over time rather than upfront. We believe that our financial resources, along with appropriate management of discretionary expenses, will allow us to manage the temporary impacts of our business transformation, COVID-19 and the Russia/Ukraine conflict on our business operations, and specifically our liquidity, for the

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~~foreseeable~~As ~~future.~~of WeDecember 31, ~~expect~~2022, toour ~~seek~~cash ~~incremental~~and ~~financing~~cash toequivalent ~~fund~~balances were $225 million, which includes unrestricted net proceeds from the ~~maturity~~July of12, 2022 financings, as well as borrowings under our ABL Credit Agreement. During the three months ended December 31, 2022, the Company borrowed $~~350~~90 million ~~Convertible~~and ~~2.25%~~repaid ~~Senior~~$34 ~~Notes~~million ~~due~~under ~~June~~the ~~15,~~ABL ~~2023~~Credit Agreement. ~~There~~During ~~can~~the besecond noquarter ~~assurance~~of wefiscal ~~will~~2023, bethe ~~able~~Company torepaid ~~obtain~~the ~~such~~remainder ~~financing~~of onthe ~~acceptable~~ABL ~~terms~~Credit Agreement.

As of both December 31, 2022 and September 30, 2022, our cash and cash equivalent balances held outside the U.S. were $117 million. As of December 31, 2022, the Company's cash and cash equivalents held outside the U.S. may need to be repatriated to fund the Company's operations in the U.S. based on our expected future sources of liquidity.

At December 31, 2022, the Company had issued and outstanding letters of credit and guarantees of $38 million under the ABL Credit Agreement and had $56 million of borrowings outstanding under its ABL Credit Agreement.

Off-Balance Sheet Arrangements

See discussion in Note 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 March 31, 2022, the Company’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.

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~~SEC ~~and Exchange Commission~~ on ~~November 22~~September 8, ~~2021~~2023 and determined that there were no significant changes to our critical accounting policies and estimates during the ~~six~~three months ended ~~March~~December 31, 2022 except for the changes discussed in more detail below.

Indefinite-lived Intangible Assets

As announced in a Form 8-K dated December 13, 2022, the Company was unable to reach an out-of-court resolution with certain holders of the Convertible Notes, Senior Notes, Exchangeable Notes, and the Term Loans outstanding under the Term Loan Credit Agreement, regarding one or more potential financings, refinancings, recapitalizations, reorganizations, restructurings, or investment transactions involving the Company. As a result, the Company revised its outlook to reflect the increased likelihood of a solvency event. The Company concluded that a triggering event had occurred and performed an interim quantitative impairment test for its indefinite-lived intangible asset, the Avaya Trade Name, as of December 31, 2022 to compare the fair value of the Avaya Trade Name to its carrying amount. The fair value of the Avaya Trade Name was estimated using the relief-from-royalty model, a form of the income approach. Under this methodology, the fair value of the trade name was estimated by applying a royalty rate to forecasted net revenues which was then discounted using a risk-adjusted rate of return on capital. The model relies on assumptions regarding revenue growth rates, royalty rate, discount rate and terminal growth rate. Revenue growth rates inherent in the forecast were based on input from internal and external market intelligence research sources that compare factors such as growth in global economies, regional industry trends and product evolutions. The royalty rate was determined using a set of observed market royalty rates. The discount rate the Company used represents the estimated weighted average cost of capital, which reflects the overall level of inherent risk and the rate of return an outside investor would expect to earn. To estimate royalty cash flows beyond the final year of its model, the Company used a terminal value approach. Under this approach, the Company applied a perpetuity growth assumption to determine the terminal value. The Company incorporated the present value of the resulting terminal value into its estimate of fair value. The result of the interim impairment test of the Avaya Trade Name as of December 31, 2022 indicated that the carrying amount of the Avaya Trade Name exceeded its estimated fair value primarily due to the updated outlook. As a result, the Company recorded an indefinite-lived intangible asset impairment charge of $9 million within the Impairment charges line item in the Condensed Consolidated Statements of Operations, representing the amount by which the carrying amount of the Avaya Trade Name exceeded its fair value. As of December 31, 2022, the remaining carrying amount of the Avaya Trade Name was $178 million.

Based on the estimates used in the interim impairment test of the Avaya Trade Name as of December 31, 2022, an increase in the discount rate or a decrease in the long-term growth rate of 50 basis points would have resulted in an incremental impairment charge of approximately $7 million and $2 million, respectively.

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Embedded Derivatives

The fair value of the debt-related embedded derivatives is determined using the with-and-without model which compares the estimated fair value of the underlying debt instrument with the embedded features to the estimated fair value of the underlying debt instrument without the embedded features, with the difference representing the estimated fair value of the embedded derivative features. The with-and-without model includes significant unobservable estimates, including estimated market yield, an estimation of the Company’s probability of default and creditor recovery rates, and the probability of the occurrence of a change of control event or asset sale. Market yields are estimated using the risk-free rate commensurate with the remaining term of the instrument, an implied credit-spread based on the issuance price and the change in option adjusted spread of the traded debt instruments. The Company uses observable trading prices of its existing debt instruments to imply a probability of default and uses the S&P recovery rating to determine the creditor recovery rate each period. Management estimates the probability of the change of control or asset sale based on its assessment of entity specific factors and the status of on-going transaction negotiations, if any. Changes in the inputs into the valuation model may have a significant impact on the estimated fair value of the Debt-related embedded derivatives.

As of December 31, 2022, the aggregate fair value of the Debt-related embedded derivatives was $56 million, which was recorded within Debt maturing within one year.

As of December 31, 2022, a hypothetical 100 basis point change in the estimated market yield would have resulted in an immaterial change in the aggregate fair value of the Debt-related embedded derivatives. A hypothetical 1000 basis point increase in the estimated probability of default would have resulted in an immaterial change in the aggregate fair value of the Debt-related embedded derivatives. A hypothetical 1000 basis point decrease in the estimated probability of default would have resulted in a change in the aggregate fair value of the Debt-related embedded derivatives of $(1) million. A hypothetical 1000 basis point change in the estimated probability of a change of control/asset sale for the Tranche B-3 Term Loans and a hypothetical 500 basis point change in the estimated probability of a change of control/asset sale for the Exchangeable Notes would have resulted in an immaterial change in the aggregate fair value of the Debt-related derivatives.

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 income (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.

EBITDA and Adjusted EBITDA have limitations as analytical tools. EBITDA measures do not represent net income (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 income (loss). In particular, our formulation of Adjusted EBITDA adjusts for certain amounts that are included in calculating net income (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 (gains) losses associated with these benefits. However, these are expenses that may recur, may vary and/or may be difficult to predict.

4046

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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 endedMarch 31,				Six months endedMarch 31,
	Three months endedDecember 31,
(In millions)	2022		2021		~~2022~~		~~2021~~
Net loss	$	(1164)	$	(5866)	$	~~(67)~~	$	~~(62)~~
Interest expense	545		5954		~~108~~		~~115~~
Interest income	(14)		~~(1)~~—		~~(1)~~		~~(1)~~
(Benefit from) provision for income taxes	(1326)		4418		5		54
Depreciation and amortization	99		~~106~~104		~~203~~		~~209~~
EBITDA	~~138~~(90)		~~150~~110		~~248~~		~~315~~
Impact of fresh start accounting adjustments(a)	—		1		—		1
Restructuring charges(a)	10		7
Restructuring charges(b)	3		6		10		10
Advisory fees(b)	33		—
Share-based compensation	141		1314		28		27
Pension and post-retirement benefit costs	(1)		—		(2)		—
Impairment charges(c)	9		—
Gain on post-retirement plan settlement	—		(14)		—		(14)
Pension and post-retirement benefit costs	(4)		(1)
Change in fair value of Emergence Date Warrants	(7)		22		(8)		27
Change in fair value of the 2017 Emergence Date Warrants	—		(1)
(Gain) loss on foreign currency transactions	(2)		(1)		(2)		1
Loss on foreign currency transactions	10		—
Adjusted EBITDA	$	~~145~~(31)	$	~~177~~129	$	~~274~~	$	~~367~~

(a)~~The~~Restructuring ~~impact~~charges ofrepresent ~~fresh~~employee ~~start~~separation ~~accounting~~costs ~~adjustments~~and infacility ~~connection~~exit ~~with~~costs (excluding the impact of accelerated depreciation expense) related to the Company's ~~emergence~~restructuring ~~from~~programs, ~~bankruptcy~~net of sublease income.

(b)~~Restructuring~~Advisory ~~charges~~fees represent ~~employee separation~~ costs ~~and~~incurred ~~facility~~to ~~exit~~assist ~~costs~~in ~~(excluding~~ the ~~impact~~assessment of ~~accelerated~~strategic ~~depreciation~~and ~~expense)~~financial ~~related~~alternatives to improve the Company's ~~restructuring~~capital ~~programs, net of sublease income~~structure.

41(c)Impairment charges include an indefinite-lived intangible asset impairment charge of $9 million. See Note 4, "Intangible Assets, net" for additional information.

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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, the anticipated impact of our previously announced cost-cutting initiatives 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 effect of Emergence on our business; the sufficiency of the Exit Term Loan Facility and the Exit ABL Facility for our future liquidity needs; our ability to continue implementing operating efficiencies and technical developments; our ability to capitalize on the reorganization and emerge as a stronger and more competitive enterprise; potential adverse effects of the Emergence on the Company's operations, third-party relationships and employee attrition; the impact and timing of any cost-savings measures and related local law requirements in various jurisdictions; the effectiveness of our internal control over financial reporting and disclosure controls and procedures, and the potential for additional material weaknesses in our internal controls over financial reporting or other potential weaknesses of which we are not currently aware or which have not been detected; the impact of litigation and regulatory proceedings; the findings of the Audit Committee’s investigations; the impact of litigation and regulatory proceedings; the impact and timing of any cost-savings measures; and the risks and other 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, 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 22~~September 8, ~~2021~~2023.

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~~had exposure to changing interest rates primarily under the Term Loan Credit Agreement and ABL Credit Agreement, each of which ~~bears~~bore interest at variable rates ~~based on LIBOR~~. AsThe ~~of March 31, 2022, 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~~949 million of variable rate loans outstanding ~~(the~~as ~~"Original~~of ~~Swap~~December 31, ~~Agreements")~~2022.

AsThe ofCompany ~~March 31,~~maintained ~~2022,~~interest ~~the~~rate ~~Company~~swap ~~also~~agreements ~~has~~with ~~forward~~a ~~starting~~net ~~swap~~notional ~~agreements~~amount toof ~~fix~~$1,543 million which fixed a portion of the variable ~~rate~~ interest due onunder its Term Loan Credit Agreement ~~from December 15, 2022~~ (the ~~maturity date of the~~ "Original Swap Agreements") ~~through June 15, 2027~~. Under the terms of the ~~forward~~Original ~~starting~~Swap ~~swap~~Agreements, ~~agreements~~which matured on December 15, 2022, the Company ~~will~~paid ~~pay~~ a fixed rate of 2.~~5480~~935% and ~~receive~~received a variable rate of interest based on one-month ~~SOFR. The Company's intends to transition its Term Loan Credit Agreement from one-month~~ LIBOR ~~to one-month SOFR effective December 15, 2022~~. The forward swap agreements have a total notional amount of $1,000 million. Over the twelve months following March 31, 2022, a hypothetical one percent change in interest rates would affect interest expense by approximately $2 million.

ItThe isCompany ~~management's~~also ~~intention~~had ~~that~~forward ~~the~~starting ~~net notional amount of interest rate~~ swap agreements beto ~~less~~fix ~~than~~a orportion ~~equal~~of to the variable rate ~~loans~~interest ~~outstanding~~due ~~during~~on ~~the~~its ~~life~~Term ofLoan ~~the~~Credit ~~derivatives.~~Agreement ~~For~~from ~~the~~December ~~three months ended March 31~~15, 2022 ~~and 2021,~~ (the ~~Company~~maturity ~~recognized~~date aof ~~loss on~~ the ~~interest~~Original ~~rate~~Swap ~~swap~~Agreements) ~~agreements~~through ofJune ~~$12 million and $13 million~~15, ~~respectively,~~2027 ~~which~~(the is"New ~~reflected~~Forward inSwap ~~Interest~~Agreements"). ~~expense~~Under in the ~~Condensed~~terms ~~Consolidated Statements~~ of ~~Operations. For both~~ the ~~six~~forward ~~months~~starting ~~ended~~swap ~~March 31~~agreements, ~~2022 and 2021,~~ the Company ~~recognized~~paid a ~~loss~~fixed ~~on the interest~~ rate ~~swap agreements~~ of ~~$25 million which is also reflected in Interest expense~~2.5480% Atand ~~March 31,~~received ~~2022, the Company maintained~~ a ~~$34~~variable ~~million~~rate ~~deferred~~of ~~gain~~interest based on ~~its~~one-month ~~interest~~SOFR. ~~rate~~The forward swap agreements ~~within~~had ~~Accumulated~~a ~~other~~notional ~~comprehensive~~amount ~~loss~~of in$1,000 ~~the Condensed Consolidated Balance Sheets~~million.

See Note 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. 48

Foreign Currency Risk

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~~location~~In ~~consistent~~December ~~with~~2022, ~~local~~the ~~regulatory~~Company ~~guidelines.~~terminated ~~Each~~its ~~foreign~~New ~~operation~~Forward ~~may~~Swap ~~conduct~~Agreements ~~business~~and inreceived ~~its~~$40 ~~local~~million ~~currency,~~of asnet ~~well~~cash proceeds as ~~the~~a ~~currency~~result of ~~other~~the ~~countries in which it operates~~termination. ~~The~~Additionally, ~~primary~~the ~~foreign~~frozen ~~currency~~deferred ~~exposures~~gains ~~for~~of ~~these~~$63 ~~foreign~~million ~~operations~~related ~~are~~to ~~Euros,~~the ~~Canadian~~Company's ~~Dollars,~~interest ~~British~~rate ~~Pound~~swap ~~Sterling,~~agreements ~~Chinese~~were ~~Renminbi,~~reclassified ~~Australian~~to ~~Dollar,~~Interest ~~Indian~~expense ~~Rupee,~~during ~~Japanese~~the ~~Yen,~~first ~~and~~quarter ~~Brazilian~~of ~~Reals~~fiscal 2023.

~~Non-U.S.~~Subsequent ~~denominated~~to ~~revenue~~the ~~was~~termination ~~$147~~of ~~million~~the ~~and~~New ~~$307~~Forward ~~million~~Swap ~~for~~Agreements, the ~~three~~Company’s ~~and~~variable ~~six~~rate ~~months~~debt ~~ended~~will ~~March~~no ~~31,~~longer ~~2022,~~be ~~respectively~~hedged. WeBased ~~estimate~~on ~~a 10% change in~~ the ~~value~~Company's ofvariable ~~the~~rate ~~U.S.~~debt ~~dollar~~outstanding ~~relative~~at toDecember ~~all~~31, ~~foreign~~2022, ~~currencies~~a ~~would~~hypothetical ~~have~~one ~~affected~~percent ~~our~~change ~~revenue~~in ~~for~~interest ~~the~~rates ~~three~~would ~~and~~affect ~~six~~interest ~~months~~expense ~~ended~~by ~~March~~approximately ~~31,~~$20 ~~2022~~million byover ~~$15~~the ~~million~~twelve ~~and~~months ~~$31~~following ~~million~~December 31, ~~respectively~~2022.

~~The~~For 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~~three ~~value~~months ofended ~~these~~December ~~contracts are recorded as a component of Other income~~31, ~~net~~2022 ~~to offset the change in the value of the underlying assets~~ and ~~liabilities. As of March 31~~2021, ~~2022,~~ the Company ~~maintained~~recognized ~~open foreign exchange contracts with~~ a ~~total~~gain ~~notional~~(loss) ~~value~~on ~~of $156 million, hedging~~ the ~~British~~interest ~~Pound~~rate ~~Sterling,~~swap ~~Mexican~~agreements ~~Peso, Czech Koruna and Japanese Yen. As~~ of ~~March 31, 2022, the fair value of open foreign exchange contracts was an unrealized loss of~~ $149 million ~~which was recorded within Other current liabilities in the Condensed Consolidated Balance Sheets. For the three months ended March 31, 2022~~ and ~~2021, the Company's (loss) gain on foreign exchange contracts was~~ $(113) ~~million~~ ~~and $1~~ million, respectively, ~~and~~which ~~was~~is ~~recorded~~reflected ~~within~~in ~~Other~~Interest ~~income,~~expense ~~net~~ in the Condensed Consolidated Statements of Operations. For the six months ended March 31, 2022 and 2021, the Company's (loss) gain on foreign exchange contracts was $(1) million and $6 million, respectively, which was also recorded within Other income, net.

See Note 1, "Background and Basis of Presentation", Note 7, "Financing Arrangements" and Note 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 variable rate Pre-Petition Debt Instruments and 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 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 the Euro, Canadian Dollar, Chinese Renminbi, British Pound Sterling and Australian Dollar.

Non-U.S. denominated revenue was $104 million for the three months ended December 31, 2022. 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 months ended December 31, 2022 by $10 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 December 31, 2022, the Company had no open foreign exchange contracts. For each of the three months ended December 31, 2022 and 2021, the Company's loss on foreign exchange contracts was not material.


Item 4.			Controls and Procedures

Disclosure Controls and Procedures

As ofpreviously ~~March 31,~~disclosed ~~2022,~~in the ~~end of the period covered by this report, the~~ Company's ~~carried~~Form ~~out~~8-K anas ~~evaluation,~~filed ~~under the supervision and~~ with the ~~participation~~SEC ofon ~~the~~November ~~Company's~~30, ~~management~~2022, ~~including~~ the Company's ~~Chief~~determined ~~Executive Officer and the Chief Financial Officer,~~ that ~~evaluated~~certain ~~the~~material ~~effectiveness~~weaknesses ~~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~~internal ~~controls~~control ~~and~~over ~~procedures~~financial ~~were~~reporting ~~effective~~existed as of ~~March 31,~~September ~~2022 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~~30, ~~processed,~~2021. ~~summarized~~Those ~~and~~material ~~reported~~weaknesses ~~within~~are ~~the~~described ~~time~~below ~~periods specified in the Securities~~ and ~~Exchange~~continue ~~Commission's rules and forms and (ii) accumulated and communicated~~ to ~~the~~exist ~~Company's~~as ~~management,~~of ~~including~~December ~~its Chief Executive Officer and Chief Financial Officer~~31, ~~as appropriate to allow timely decisions regarding required disclosure~~2022.

As of December 31, 2022, the end of the period covered by this report, the Company, under the supervision and with the participation of the Company's management, including the Company's Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of the Company's disclosure controls and procedures (as such term is defined in Rules §240.13a-15(e) and §240.15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act")). Based on that evaluation, due to the material weaknesses in internal control over financial reporting described below, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were not effective as of December 31, 2022. Nevertheless, based on the completion of the Audit Committee's planned procedures with respect to its investigations, and the performance of additional procedures by management designed to ensure the reliability of our financial reporting, we believe that the condensed consolidated financial statements in this Quarterly Report fairly present, in all material respects, our financial position, results of operations and cash flows as of the dates, and for the periods, presented, in conformity with generally accepted accounting principles in the United States of America ("U.S. GAAP").

Material Weaknesses in Internal Control Over Financial Reporting

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

The following material weaknesses have been identified and continue to exist as of December 31, 2022:

The Company did not design and maintain an effective control environment as former senior management failed to set an appropriate tone at the top. Specifically, former senior management applied pressure to individuals to achieve financial targets

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which created an environment where employees were hesitant to express dissent or communicate concerns to others within the organization. The ineffective control environment contributed to the following additional material weaknesses:

The Company did not design and maintain effective controls related to the information and communication component of the COSO framework. Specifically, the Company did not design and maintain effective controls to ensure appropriate communication between certain functions within the Company. This material weakness contributed to an additional material weakness, that the Company did not design and maintain effective controls over the ethics and compliance program.

These material weaknesses did not result in any material misstatements of the Company's financial statements or disclosures, but did result in an immaterial interim out-of-period correction during fiscal 2022. Additionally, each of the material weaknesses described above could result in a misstatement of substantially all account balances or disclosures that would result in a material misstatement to the annual or interim consolidated financial statements that would not be prevented or detected.

Remediation Plan

Management is actively engaged and committed to taking steps necessary to remediate the control deficiencies that constituted the material weaknesses. To date, the Company made the following enhancements to our internal control over financial reporting:

▪On July 28, 2022, Avaya removed James M. Chirico, Jr. as Chief Executive Officer and appointed Alan B. Masarek as new Chief Executive Officer, effective August 1, 2022;

▪It was determined that Stephen D. Spears would step down from his role as Chief Revenue Officer on October 18, 2022 and he departed the Company effective November 1, 2022;

▪Kieran McGrath stepped down as Chief Financial Officer, effective November 9, 2022, and retired from the Company, effective December 1, 2022;

▪Avaya appointed Rebecca A. Roof as Interim Chief Financial Officer, effective November 9, 2022, and on June 16, 2023, the Company appointed Amy O'Keefe as its Chief Financial Officer;

▪Alan B. Masarek has held multiple "All Hands" meetings with Avaya employees where he reinforces his expectations of an environment grounded in transparency;

▪Alan B. Masarek has held executive coaching sessions with leadership team to align on effective communication and a culture that includes a safe environment for transparent communication; and

▪Enhanced inquiries within the scope of internal management representation letters.

Our remediation activities are continuing during fiscal 2023. In addition to the above actions, Avaya is in the process of designing and implementing additional activities, including but not limited to:

▪Enhancing its policies and procedures related to appropriate maintenance of its whistleblower log and the proper dissemination of related information and materials, including those received by members of the Board.

▪Providing additional and continuing training for employees and members of management to ensure information is appropriately communicated to all relevant personnel in connection with SEC filings and/or the preparation of our consolidated financial statements or other matters.

▪Enhancing internal disclosure control processes and related internal management representation letter processes and training to improve communication.

▪To ensure employees fully understand the Company's commitment to establishing and maintaining an effective control environment and appropriate tone at the top, management will continue to execute against a communications plan that includes the following:

•Board level participation in messaging across the organization that reinforces a safe environment for raising concerns without fear of retaliation;

•Conducting in-depth special training courses for the Company's entire sales team and personnel involved in the forecasting process regarding the importance of the Company establishing and maintaining effective disclosure controls. Management intends to include these principles as an ongoing component of our new hire training and other on-going training courses; and

•Enhancement of future employee engagement surveys to monitor for negative indicators of tone at the top.

▪To ensure effective information and communication controls and enhanced controls related to the ethics and compliance program, management is developing a program to address the following remediation activities:

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•Enhance Board of Directors manual to define communications process related to allegations of fraud or misconduct;

•Reinforce management Disclosure Committee procedures with respect to the evaluation of potential allegations of fraud or misconduct; and

•Develop employee training to improve awareness of fraud and misconduct allegations that should be included in internal management representation letters.

Changes in Internal Control Over Financial Reporting

~~During~~There the second quarter of fiscal 2022, the Company implemented 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 transition to the new accounting module necessitated changes in the design and operation of the Company's 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~~our ~~Company's~~ internal control over financial reporting (as such term is defined in Rules §240.13a-15(f) and §240.15d-15(f) ~~under~~of the ~~Securities~~ Exchange Act ~~of 1934~~) during the quarter ended ~~March~~December 31, 2022 that have materially affected, or are reasonably likely to materially affect, ~~the~~our ~~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 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 ~~March~~December 31, 2022 to the risk factors previously disclosed in the Company's Form 10-K filed with the Securities and Exchange Commission on ~~November 22~~September 8, ~~2021 other than as shown below:~~2023.

Risks Related to Our Business

Intellectual Property and Information Security

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 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 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. In come cases the attacks have been sponsored by state actors with significant financial and technological means. 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, 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.

Global Operations and Regulations

Since we operate internationally, operational, logistical, economic and/or political challenges in a specific country or region could negatively affect our revenue, costs, expenses and financial condition or those of our channel partners and distributors.

We do business in approximately 190 countries. We conduct significant sales, customer support operations and a significant portion of our research and development activities in countries outside of the U.S., and we depend on non-U.S. operations of

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our contract manufacturers and our channel partners. For fiscal 2021, we derived 43% of our revenue from sales outside of the U.S., with the most significant portions generated from Germany, the United Kingdom and Canada. In addition, we intend to continue to grow our business internationally. The vast majority of our contract manufacturing also takes place outside the U.S., primarily in southern China.

Accordingly, our results could be materially and adversely affected by a variety of uncontrollable and changing factors relating to international business operations, including:

•economic conditions and geopolitical developments, such as the Russia/Ukraine conflict and the sanctions and export controls recently imposed by the U.S., UK and the EU on certain industries and Russian parties as a result of the conflict, as well as any counter responses by the governments of Russia or other jurisdictions, along with tariffs, changes to significant trading relationships, the negotiation of new or revised international trade agreements and retaliatory efforts from such trade restrictions, constraints and prohibitions, such as the U.S. China trade dispute and the EU's position on humanitarian rights towards countries in the Middle East, Africa and Asian territories;

•political or social unrest, economic instability or corruption or sovereign debt risks in a specific country or region;

•laws and regulations, both international and local, related to trade compliance, anti-corruption, anti-bribery, information security, data privacy and protection, labor, the environment, climate change and other topics and requirements;

•protectionist and local security legislation;

•difficulty in enforcing intellectual property rights, such as protecting against the counterfeiting of our products;

•less established legal and judicial systems necessary to enforce our rights;

•relationships with employees and works councils, as well as difficulties in finding qualified employees, including skilled design and technical employees, as companies expand their operations offshore;

•high levels of inflation and currency fluctuations;

•unfavorable tax and currency regulations;

•military conflict, terrorist activities and health pandemics or similar issues, such as the current conflict and military action between Russia and Ukraine;

•future government shutdowns or uncertainties which could affect the portion of our revenues which comes from the U.S. federal government sector;

•differing responses to the COVID-19 pandemic;

•natural disasters, such as earthquakes, hurricanes or floods, anywhere we and/or our channel partners and distributors have business operations; and

•other matters in any of the countries or regions in which we and our contract manufacturers and business partners currently operate or intend to operate, including in the U.S.

Any or all of these factors could materially adversely affect our business, operating results or financial condition.

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General Risk Factors

Business and/or supply chain interruptions, whether due to catastrophic disasters or other events, could adversely affect our operations.

Our operations and those of our contract manufacturers and outsourced service providers are vulnerable to interruption by fire, earthquake, hurricane, flood or other natural disasters, power loss, computer viruses, computer systems failure, telecommunications failure, pandemics, quarantines, national catastrophe, terrorist activities, war and other events beyond our control. For instance, we have operations in the Silicon Valley area of California near known earthquake fault zones, which are vulnerable to damage from earthquakes. Our disaster recovery plans may not be sufficient to address these interruptions. If any disaster were to occur, our ability and the ability of our contract manufacturers and outsourced service providers to operate could be seriously impaired and we could experience material harm to our business, operating results and financial condition. Because our ability to attract and retain customers depends on our ability to provide customers with highly reliable service, even minor interruptions in our operations could harm our reputation as a reliable solutions provider. In addition, the coverage or limits of our business interruption insurance may not be sufficient to compensate for any losses or damages that may occur.

In addition, these catastrophic disasters or other events, such as the global shortage of semiconductor chips and the military conflict between Russia and Ukraine, related export controls and possible counter responses to such sanctions, could lead to supply chain disruptions, restrictions on our ability to distribute our products and restrictions on our ability to provide services in the regions affected. Any prolonged and significant supply chain disruption that impacts us or our customers, partners, vendors and/or suppliers, or an inability to provide products or services, would likely impact our sales in the affected region, increase our costs and negatively affect our operating results. For instance, the COVID-19 pandemic, which adversely affected the global economy and financial markets in fiscal 2021 and fiscal 2020, resulted in an economic downturn that affected demand for our products and services and likely impacted our operating results. Similarly, the decrease in the availability of global shipping has led to an increase in freight and shipping costs and there are no assurances that such shipping disruptions and higher logistics costs will not continue or increase, which may adversely affect our operating results and financial condition.


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 December 31, 2022:

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)
January 1 - 31, 2022	—	$	—	—	$	147,473,425
October 1 - 31, 2022	—	$	—	—	$	147,473,425
February 1 - 28, 2022	216,529	$	14.9989	—	$	147,473,425
November 1 - 30, 2022	—	$	—	—	$	147,473,425
March 1 - 31, 2022	2,154	$	13.2500	—	$	147,473,425
December 1 - 31, 2022	—	$	—	—	$	132,473,425
Total	~~218,683~~—	$	~~14.9816~~—	—

(1)During ~~All~~the ~~purchases~~fourth ~~represent~~quarter of fiscal 2022, the Company suspended distribution of shares of its common stock which vested pursuant to awards issued under the 2019 Equity Incentive Plan until the Company's related registration statement is reinstated. As such, no shares of common stock were withheld for taxes on restricted stock units that vested during the three months ended December 31, 2022. Refer to Note 12, "Share-based Compensation," for further details.

(2) The Company ~~maintains~~maintained a warrant repurchase program ~~authorizing~~which authorized 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~~Company's ~~may~~2017 beEmergence ~~made~~Date ~~from~~Warrants ~~time~~expired toon ~~time~~December in15, ~~the~~2022, ~~open~~and ~~market,~~none ~~through~~of ~~block~~the ~~trades~~2017 orEmergence inDate ~~privately~~Warrants ~~negotiated~~were ~~transactions~~repurchased.

(3) The Company ~~maintains~~maintained a share repurchase program ~~authorizing~~which authorized it to repurchase the Company's common stock for an aggregate expenditure of up to $500 million. The repurchases ~~may~~were to be made from time to time in the open market, through block trades or in privately negotiated transactions. Upon implementation of the Plan, the common stock was canceled.


Item 3.			Defaults Upon Senior Securities

~~None~~See Note 1, “Background and Basis of Presentation,” and our current report on Form 8-K filed with the SEC on February 14, 2023 for a description of our previously disclosed defaults under our Pre-Petition Debt Instruments.


Item 4.			Mine Safety Disclosures

Not applicable.


Item 5.			Other Information

None.

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Item 6.			Exhibits

Exhibit Number						Exhibit Description
10.1						Amendment No. 1 to the Avaya Holdings Corp 2019 Equity Incentive Plan (incorporated herein by reference to Annex B of the Company’s Definitive Proxy Statement on Schedule 14A filed on January 18, 2022)
10.1*+						Schedule 1 to the Management Services Agreement, dated as of November 4, 2022, by and between Avaya Holdings Corp. and AP Services, LLC, a subsidiary of AlixPartners, LLP, related to the provision of the services of Interim CFO Rebecca A. Roof
31.1						Certification of James M. Chirico, Jr. pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
10.2						Retention Bonus and Sign-on Bonus Letter Agreement, dated December 23, 2022, between Avaya Inc. and Alan B. Masarek
31.2						Certification of Kieran J. McGrath pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
10.3						Retention Bonus Letter Agreement, dated December 23, 2022, between Avaya Inc. and Shefali Shah
32.1						Certification of James M. Chirico, Jr. pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
31.1						Certification of Alan B. Masarek pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.2						Certification of Kieran J. McGrath pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
31.2						Certification of Amy O'Keefe pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1						Certification of Alan B. Masarek pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2						Certification of Amy O'Keefe pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS						XBRL 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.SCH						XBRL Taxonomy Extension Schema
101.CAL						XBRL Taxonomy Extension Calculation Linkbase
101.DEF						XBRL Taxonomy Extension Definition Linkbase
101.LAB						XBRL Taxonomy Extension Labels Linkbase
101.PRE						XBRL Taxonomy Extension Presentation Linkbase
104						Cover Page Interactive Data File (formatted as Inline XBRL in Exhibit 101)

47* Indicates management contract or compensatory plan or arrangement.

+ Portions of this exhibit have been omitted pursuant to Item 601(b)(10)(iv) of Regulation S-K, which portions will be furnished to the Securities and Exchange Commission upon request.

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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~~AMY ~~SPEED~~O'KEEFE Name: ~~Kevin~~Amy ~~Speed~~O'Keefe Title: ~~Global~~Executive Vice President, ~~Controller~~ and Chief ~~Accounting~~Financial Officer

~~May~~September 108, ~~2022~~2023

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