What changed in this filing

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Item 1. Financial Statements

2022-05-05 compared with 2022-02-07 · 206 added, 189 removed, 739 unchanged (35% of the section changed)

3 unchanged sentences

(in millions, except per share data)

Three Months Ended Six Months Ended

January 1, 2022 January 2, 2021 January 1, 2022 January 2, 2021

Three Months Ended Nine Months Ended

April 2, 2022 April 3, 2021 April 2, 2022 April 3, 2021

Product revenue $ 275.8 $ 266.6 $ 842.3 $ 776.6

11 unchanged sentences

Amortization of other intangibles 2.2 8.3 7.5 24.9

Restructuring and related (benefits) charges ( 0.1 ) 0.2 ( 0.1 ) ( 0.4 )

Restructuring and related benefits — ( 0.4 ) ( 0.1 ) ( 0.8 )

Total operating expenses 146.1 146.1 435.4 422.0

1 unchanged sentence

Loss on convertible note settlement (Note 11) ( 6.4 ) — ( 98.7 ) —

Interest income and other income, net 1.1 1.1 2.5 1.7

Interest income and other income (loss), net 0.6 ( 0.9 ) 3.1 0.8

Interest expense ( 6.4 ) ( 3.6 ) ( 17.1 ) ( 10.8 )

Income (loss) before income taxes 36.9 39.8 ( 4.3 ) 68.1

Income before income taxes 28.6 31.4 24.3 99.5

Provision for income taxes 9.4 14.2 25.3 35.3

10 unchanged sentences

(in millions)

Three Months Ended Six Months Ended

January 1, 2022 January 2, 2021 January 1, 2022 January 2, 2021

Three Months Ended Nine Months Ended

April 2, 2022 April 3, 2021 April 2, 2022 April 3, 2021

Net income (loss) $ 19.2 $ 17.2 $ ( 1.0 ) $ 64.2

9 unchanged sentences

(in millions, except share and par value data)

January 1, 2022 July 3, 2021

April 2, 2022 July 3, 2021

Current assets:

26 unchanged sentences

1 billion shares authorized;

233 million shares at January 1, 2022 and 228 million shares at July 3, 2021, issued and outstanding

228 million shares issued and outstanding at April 2, 2022 and July 3, 2021,

Additional paid-in capital 70,360.9 70,183.2

7 unchanged sentences

(in millions)

Six Months Ended

January 1, 2022 January 2, 2021

Nine Months Ended

April 2, 2022 April 3, 2021

OPERATING ACTIVITIES:

34 unchanged sentences

Repayment of revolving credit facility ( 150.0 ) —

Payment of acquisition related holdback ( 0.9 ) —

Payment of acquisition related contingent consideration ( 4.1 ) —

2 unchanged sentences

Effect of exchange rates on cash, cash equivalents and restricted cash $ ( 8.9 ) $ 21.9

Net increase in cash, cash equivalents and restricted cash 35.3 105.3

Net (decrease) increase in cash, cash equivalents and restricted cash ( 106.9 ) 134.6

Cash, cash equivalents and restricted cash at the beginning of the period (1)

2 unchanged sentences

(1) These amounts include both current and non-current balances of restricted cash totaling $ 10.6 million and $ 8.4 million as of July 3, 2021 and June 27, 2020, respectively.

(2) These amounts include both current and non-current balances of restricted cash totaling $ 11.6 million and $ 8.5 million as of January 1, 2022 and January 2, 2021, respectively.

(2) These amounts include both current and non-current balances of restricted cash totaling $ 11.7 million and $ 9.8 million as of April 2, 2022 and April 3, 2021, respectively.

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

2 unchanged sentences

(in millions)

Three Months Ended January 1, 2022

Additional Paid-In Capital

Accumulated Deficit

Accumulated Other Comprehensive Loss

Balance at October 2, 2021 239.7 $ 0.2 $ 70,349.9 $ ( 69,385.6 ) $ ( 105.9 ) $ 858.6

Net loss — — — 34.6 — 34.6

Three Months Ended April 2, 2022

Shares Amount Additional Paid-In Capital Accumulated Deficit Accumulated Other Comprehensive Loss Total

Balance at January 1, 2022 232.5 $ 0.2 $ 70,354.3 $ ( 69,470.4 ) $ ( 109.3 ) $ 774.8

Net income — — — 19.2 — 19.2

Other comprehensive loss — — — — ( 12.0 ) ( 12.0 )

3 unchanged sentences

Convertible note settlement (Note 11) — — ( 8.9 ) — ( 8.9 )

Balance at January 1, 2022 232.5 $ 0.2 $ 70,354.3 $ ( 69,470.4 ) $ ( 109.3 ) $ 774.8

Three Months Ended January 2, 2021

Balance at April 2, 2022 228.2 $ 0.2 $ 70,360.9 $ ( 69,529.9 ) $ ( 121.3 ) $ 709.9

Three Months Ended April 3, 2021

Additional Paid-In Capital

1 unchanged sentence

Accumulated Other Comprehensive Loss

Balance at October 3, 2020 229.3 $ 0.2 $ 70,152.5 $ ( 69,334.2 ) $ ( 137.5 ) $ 681.0

Balance at January 2, 2021 228.5 $ 0.2 $ 70,159.8 $ ( 69,324.0 ) $ ( 102.4 ) $ 733.6

Net income — — — 17.2 — 17.2

Other comprehensive income — — — — 35.1 35.1

Other comprehensive loss — — — — ( 4.1 ) ( 4.1 )

Shares issued under employee stock plans, net of tax 0.6 — — — — —

1 unchanged sentence

Repurchase of common stock ( 0.5 ) — — ( 7.9 ) — ( 7.9 )

Balance at January 2, 2021 228.5 $ 0.2 $ 70,159.8 $ ( 69,324.0 ) $ ( 102.4 ) $ 733.6

Six Months Ended January 1, 2022

Balance at April 3, 2021 228.6 $ 0.2 $ 70,170.8 $ ( 69,314.7 ) $ ( 106.5 ) $ 749.8

Nine Months Ended April 2, 2022

Additional Paid-In Capital

8 unchanged sentences

Convertible note settlement (Note 11) 10.6 — 142.8 — 142.8

Balance at January 1, 2022 232.5 $ 0.2 $ 70,354.3 $ ( 69,470.4 ) $ ( 109.3 ) $ 774.8

Six Months Ended January 2, 2021

Balance at April 2, 2022 228.2 $ 0.2 $ 70,360.9 $ ( 69,529.9 ) $ ( 121.3 ) $ 709.9

Nine Months Ended April 3, 2021

Additional Paid-In Capital

7 unchanged sentences

Repurchase of common stock ( 2.3 ) — — ( 31.7 ) — ( 31.7 )

Balance at January 2, 2021 228.5 $ 0.2 $ 70,159.8 $ ( 69,324.0 ) $ ( 102.4 ) $ 733.6

Balance at April 3, 2021 228.6 $ 0.2 $ 70,170.8 $ ( 69,314.7 ) $ ( 106.5 ) $ 749.8

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

3 unchanged sentences

The financial information for Viavi Solutions Inc.

(VIAVI also referred to as the Company) for the three and six months ended January 1, 2022 and January 2, 2021 is unaudited, and includes all normal and recurring adjustments the Company’s management considers necessary for a fair statement of the financial information set forth herein.

(VIAVI also referred to as the Company) for the three and nine months ended April 2, 2022 and April 3, 2021 is unaudited, and includes all normal and recurring adjustments the Company’s management considers necessary for a fair statement of the financial information set forth herein.

The accompanying consolidated financial statements are presented in accordance with accounting principles generally accepted in the United States of America (U.S.

6 unchanged sentences

Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (refer to “Note 2.

Recently Issued Accounting Pronouncements” for more detail), there have been no material changes to the Company’s accounting policies during the three and six months ended January 1, 2022 as compared to the significant accounting policies presented in “Note 1.

Recently Issued Accounting Pronouncements” for more detail), there have been no material changes to the Company’s accounting policies during the three and nine months ended April 2, 2022 as compared to the significant accounting policies presented in “Note 1.

Basis of Presentation” of the Notes to the Consolidated Financial Statements included in the Company’s Annual Report for the year ended July 3, 2021 on Form 10-K, filed with the SEC on August 23, 2021.

1 unchanged sentence

GAAP for complete financial statements.

The results for the three and six months ended January 1, 2022 and January 2, 2021 may not be indicative of results for the fiscal year ending July 2, 2022 or any future periods.

The results for the three and nine months ended April 2, 2022 and April 3, 2021 may not be indicative of results for the fiscal year ending July 2, 2022 or any future periods.

The Company utilizes a 52-53 week fiscal year ending on the Saturday closest to June 30th.

12 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

A novel strain of coronavirus (COVID-19) first identified in Wuhan, China by the Chinese government in December 2019, and subsequently declared an international pandemic by the World Health Organization (WHO) in March 2020 continues to have a global impact.

The worldwide spread of the COVID-19 virus resulted in a global slowdown of economic activity which could continue to impact demand for a broad variety of goods and services, including from the Company’s customers, while also continuing to disrupt sales channels and marketing activities for an unknown period of time until the disease is contained.

New and potentially more contagious variants of the virus emerged in late 2020 and 2021, along with a surge in cases in several regions across the globe, resulting in renewed shutdown and shelter in place orders in certain regions.

While rollout of several vaccines commenced in December 2020, the pace of the global rollout has been slow and the demand for vaccine far outpaces available supply, particularly in developing nations.

As economies recover, there are continued supply chain constraints, shortages and delays, along with inflationary pricing pressures.

Governmental vaccine mandates could lead to attrition and operational challenges.

A novel strain of coronavirus (COVID-19) declared an international pandemic by the World Health Organization (WHO) in March 2020 continues to have a global impact more than two years since it was first identified in Wuhan, China.

New and potentially more contagious variants of the virus have emerged over the course of the pandemic, along with a surge in cases in several regions across the globe, including Europe and Asia, resulting in renewed shutdown, mandatory quarantines and shelter in place orders in certain regions.

These events have led, at times, to slowdowns in shipping and commercial activities.

While rollout of several vaccines commenced in December 2020, the pace of the global rollout has been slow and the demand for vaccine outpaces available supply, particularly in developing nations.

As economies recover, there are shipping and logistics challenges and continued supply chain constraints, shortages and delays, along with inflationary pricing pressures.

Governmental vaccine mandates and mandated quarantines could lead to attrition and operational challenges.

While the Company expects that all of this could have a negative impact to its sales and its results of operations, the Company is not aware of any specific event or circumstances that would require an update to the estimates or judgments or a revision of the carrying value of assets or liabilities as of the date of issuance of this Quarterly Report on Form 10-Q.

28 unchanged sentences

Accumulated deficit $ ( 69,393.7 ) $ 71.4 $ ( 69,322.3 )

The following table presents the impact of the standard adoption to select line items of the Company’s Consolidated Statement of Operations for the three and six months ended January 2, 2021 ( in millions, except per-share data ):

Three Months Ended January 2, 2021

The following table presents the impact of the standard adoption to select line items of the Company’s Consolidated Statement of Operations for the three and nine months ended April 3, 2021 ( in millions, except per-share data ):

Three Months Ended April 3, 2021

As Reported Adjustment As Adjusted

7 unchanged sentences

Diluted 240.2 — 240.2

Six Months Ended January 2, 2021

Nine Months Ended April 3, 2021

As Reported Adjustment As Adjusted

21 unchanged sentences

The Company is evaluating the impact of adopting this new accounting guidance on its Consolidated Financial Statements.

In March 2022, the FASB issued ASU 2022-01 Derivatives and Hedging (Topic 815), which clarifies guidance on fair value hedge accounting of interest rate risk for portfolios of financial assets.

The amendments in this update expand the current last-of-layer method of hedge accounting that permits only one hedged layer to allow multiple hedged layers of a single closed portfolio.

To reflect that expansion, the last-of-layer method is renamed the portfolio layer method.

This guidance is effective for the Company in the first quarter of fiscal 2024 with early adoption permitted.

The Company is evaluating the impact of adopting this new accounting guidance on its Consolidated Financial Statements.

In March 2022, the FASB issued ASU 2022-02 Financial Instruments - Credit Losses (Topic 326), which eliminates the accounting guidance on troubled debt restructurings for creditors in ASC 310 and amends the guidance on vintage disclosures to require disclosure of current-period gross write-offs by year of origination.

The ASU also updates the requirements related to the accounting for credit losses under ASC 326 and adds enhanced disclosures for creditors with respect to loan refinancings and restructurings for borrowers experiencing financial difficulty.

This guidance is effective for the Company in the first quarter of fiscal 2024 with early adoption permitted.

The Company is evaluating the impact of adopting this new accounting guidance on its Consolidated Financial Statements.

VIAVI SOLUTIONS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Earnings Per Share

The following table sets forth the computation of basic and diluted net income per share ( in millions, except per share data ):

Three Months Ended Six Months Ended

January 1, 2022 January 2, 2021 January 1, 2022 January 2, 2021

The following table sets forth the computation of basic and diluted net income (loss) per share ( in millions, except per share data ):

Three Months Ended Nine Months Ended

April 2, 2022 April 3, 2021 April 2, 2022 April 3, 2021

Net income (loss) $ 19.2 $ 17.2 $ ( 1.0 ) $ 64.2

13 unchanged sentences

Debt” for more details.

VIAVI SOLUTIONS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The following table sets forth the weighted-average potentially dilutive securities excluded from the computation of the diluted net income per share because their effect would have been anti-dilutive ( in millions ):

Three Months Ended Six Months Ended

January 1, 2022 January 2, 2021 January 1, 2022 January 2, 2021

Three Months Ended Nine Months Ended

April 2, 2022 April 3, 2021 April 2, 2022 April 3, 2021

Restricted stock units (1)

6 unchanged sentences

The Company’s accumulated other comprehensive loss consists of the accumulated net unrealized gains or losses on available-for-sale investments, foreign currency translation adjustments and change in unrealized components of defined benefit obligations.

For the six months ended January 1, 2022, the changes in accumulated other comprehensive loss, net of tax, by component were as follows ( in millions ):

VIAVI SOLUTIONS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

For the nine months ended April 2, 2022, the changes in accumulated other comprehensive loss, net of tax, by component were as follows ( in millions ):

Unrealized losses on available-for sale investments Foreign

1 unchanged sentence

Beginning balance as of July 3, 2021 $ ( 5.1 ) $ ( 68.1 ) $ ( 24.0 ) $ ( 97.2 )

Other comprehensive loss before reclassification 0.1 ( 13.7 ) — ( 13.6 )

Other comprehensive income (loss) before reclassification 0.1 ( 26.5 ) — ( 26.4 )

Amounts reclassified out of accumulated other comprehensive loss — — 2.3 2.3

Net current-period other comprehensive loss 0.1 ( 13.7 ) 1.5 ( 12.1 )

Ending balance as of January 1, 2022 $ ( 5.0 ) $ ( 81.8 ) $ ( 22.5 ) $ ( 109.3 )

(1) The amount reclassified out of accumulated other comprehensive loss represents the amortization of actuarial losses included as a component of cost of revenues, research and development (R&D) and selling, general and administrative (SG&A) in the Consolidated Statement of Operations for the six months ended January 1, 2022.

There was no tax impact for the six months ended January 1, 2022.

Net current-period other comprehensive income (loss) 0.1 ( 26.5 ) 2.3 ( 24.1 )

Ending balance as of April 2, 2022 $ ( 5.0 ) $ ( 94.6 ) $ ( 21.7 ) $ ( 121.3 )

There was no tax impact for the nine months ended April 2, 2022.

Refer to “Note 17.

5 unchanged sentences

The acquisition of RPC expands the Company’s 3D Sensing offerings.

VIAVI SOLUTIONS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Other Acquisitions

5 unchanged sentences

The acquired developed technology and customer relationship assets are being amortized over their estimated useful lives of six years .

VIAVI SOLUTIONS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Acquisition-related Contingent Consideration

The following table provides a reconciliation of changes in the fair value of the Company’s earn-out liabilities associated with the Company’s acquisitions for the three and six months ended January 1, 2022 and January 2, 2021 ( in millions ):

Three Months Ended Six Months Ended

January 1, 2022 January 2, 2021 January 1, 2022 January 2, 2021

The following table provides a reconciliation of changes in the fair value of the Company’s earn-out liabilities associated with the Company’s acquisitions for the three and nine months ended April 2, 2022 and April 3, 2021 ( in millions ):

Three Months Ended Nine Months Ended

April 2, 2022 April 3, 2021 April 2, 2022 April 3, 2021

Beginning period balance $ 3.1 $ 8.9 $ 4.0 $ 9.9

6 unchanged sentences

Gross receivables include both billed and unbilled receivables (including Contract Assets).

As of January 1, 2022, and July 3, 2021, the Company had total unbilled receivables of $ 7.7 million and $ 6.2 million, respectively.

As of April 2, 2022, and July 3, 2021, the Company had total unbilled receivables of $ 7.7 million and $ 6.2 million, respectively.

The Company also has short-term and long-term deferred revenues related to undelivered product and professional services, consisting of installations and consulting engagements, which are recognized as the Company's performance obligations under the contract are completed and accepted by the customer.

VIAVI SOLUTIONS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The following tables summarize the activity related to deferred revenue ( in millions ):

January 1, 2022

Three Months Ended Six Months Ended

April 2, 2022

Three Months Ended Nine Months Ended

Deferred revenue:

9 unchanged sentences

Remaining performance obligation estimates are subject to change and are affected by several factors, including terminations, changes in the scope of contracts, adjustments for revenue that have not materialized, and adjustments for currency.

The value of the transaction price allocated to remaining performance obligations as of January 1, 2022, was $ 271.8 million.

The value of the transaction price allocated to remaining performance obligations as of April 2, 2022, was $ 282.7 million.

The Company expects to recognize approximately 92 % of remaining performance obligations as revenue within the next 12 months, and the remainder thereafter.

VIAVI SOLUTIONS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Accounts receivable allowance - Credit losses

1 unchanged sentence

July 3, 2021 Charged to Costs and Expenses Deductions (1)

January 1, 2022

April 2, 2022

Allowance for credit losses $ 2.0 $ 0.8 $ ( 1.3 ) $ 1.5

2 unchanged sentences

The following table presents the components of inventories, net ( in millions ):

January 1, 2022 July 3, 2021

April 2, 2022 July 3, 2021

Finished goods $ 43.9 $ 41.0

2 unchanged sentences

Inventories, net $ 113.9 $ 94.9

VIAVI SOLUTIONS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Prepayments and other current assets

The following table presents the components of prepayments and other current assets ( in millions ):

January 1, 2022 July 3, 2021

April 2, 2022 July 3, 2021

Prepayments $ 12.7 $ 13.4

7 unchanged sentences

The following table presents the components of other current liabilities ( in millions ):

January 1, 2022 July 3, 2021

April 2, 2022 July 3, 2021

Customer prepayments $ 0.6 $ 0.4

6 unchanged sentences

Other current liabilities $ 35.4 $ 57.1

VIAVI SOLUTIONS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Other non-current liabilities

The following table presents components of other non-current liabilities ( in millions ):

January 1, 2022 July 3, 2021

April 2, 2022 July 3, 2021

Pension and post-employment benefits $ 86.9 $ 97.0

9 unchanged sentences

Short-Term Investments

As of January 1, 2022 the Company’s short-term investments of $ 1.7 million were comprised primarily of trading securities related to the deferred compensation plan, of which $ 0.4 million was invested in debt securities, $ 0.2 million was invested in money market instruments and $ 1.1 million was invested in equity securities.

VIAVI SOLUTIONS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

As of April 2, 2022 the Company’s short-term investments of $ 1.6 million were comprised primarily of trading securities related to the deferred compensation plan, of which $ 0.3 million was invested in debt securities, $ 0.2 million was invested in money market instruments and $ 1.1 million was invested in equity securities.

As of July 3, 2021, the Company’s short-term investments of $ 1.6 million were comprised primarily of trading securities related to the deferred compensation plan, of which $ 0.3 million was invested in debt securities, $ 0.3 million was invested in money market instruments and $ 1.0 million was invested in equity securities.

Trading securities are reported at fair value, with the unrealized gains or losses resulting from changes in fair value recognized in the Company’s Consolidated Statements of Operations as a component of Interest income and other income, net.

Non-Designated Foreign Currency Forward Contracts

1 unchanged sentence

As a result, the Company is exposed to foreign exchange risks.

The Company utilizes foreign exchange forward contracts to manage foreign currency risk associated with foreign currency denominated

monetary assets and liabilities, primarily certain short-term intercompany receivables and payables, and to reduce the volatility of earnings and cash flows related to foreign-currency transactions.

The Company utilizes foreign exchange forward contracts to manage foreign currency risk associated with foreign currency denominated monetary assets and liabilities, primarily certain short-term intercompany receivables and payables, and to reduce the volatility of earnings and cash flows related to foreign-currency transactions.

The Company does not use these foreign currency forward contracts for trading purposes.

As of January 1, 2022, the Company had forward contracts that were effectively closed but not settled with the counterparties by quarter end.

Therefore, the fair value of these contracts of $ 1.8 million and $ 2.2 million is reflected as prepayments and other current assets and other current liabilities, respectively.

The Company had forward contracts that were effectively closed but not settled with the counterparties as of the balance sheet date.

As of April 2, 2022, the fair value of these contracts of $ 2.6 million and $ 4.2 million is reflected as prepayments and other current assets and other current liabilities, respectively.

As of July 3, 2021, the fair value of these contracts of $ 2.6 million and $ 1.4 million is reflected as prepayments and other current assets and other current liabilities, respectively.

1 unchanged sentence

therefore, the fair value of the contracts is not significant.

As of January 1, 2022 and July 3, 2021, the notional amounts of the forward contracts the Company held to purchase foreign currencies were $ 123.4 million and $ 114.0 million, respectively, and the notional amounts of forward contracts the Company held to sell foreign currencies were $ 25.5 million and $ 27.8 million, respectively.

The change in the fair value of these foreign currency forward contracts is recorded as gain or loss in the Company’s Consolidated Statements of Operations as a component of Interest income and other income, net.

As of April 2, 2022 and July 3, 2021, the notional amounts of the forward contracts the Company held to purchase foreign currencies were $ 106.4 million and $ 114.0 million, respectively, and the notional amounts of forward contracts the Company held to sell foreign currencies were $ 33.9 million and $ 27.8 million, respectively.

VIAVI SOLUTIONS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The cash flows related to the settlement of foreign currency forward contracts are classified as operating activities.

The foreign exchange forward contracts incurred a loss of $ 0.7 million and $ 2.5 million for the three and six months ended January 1, 2022 and gains of $ 6.9 million and $ 13.3 million for the three and six months ended January 2, 2021 , respectively.

The foreign exchange forward contracts incurred a loss of $ 1.6 million and $ 4.1 million for the three and nine months ended April 2, 2022 and a loss of $ 0.1 million and a gain of $ 13.3 million for the three and nine months ended April 3, 2021, respectively.

Fair Value Measurements

7 unchanged sentences

Treasury securities and marketable equity securities as they are traded with sufficient volume and frequency of transactions.

VIAVI SOLUTIONS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

includes financial instruments for which the valuations are based on quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable data for substantially the full term of the assets or liabilities.

4 unchanged sentences

includes financial instruments for which fair value is derived from valuation-based inputs, that are unobservable and significant to the overall fair value measurement.

As of January 1, 2022 and July 3, 2021, the Company did not hold any Level 3 investment securities.

The Company’s Level 3 liabilities as of January 1, 2022 and July 3, 2021, consist of contingent purchase consideration.

As of April 2, 2022 and July 3, 2021, the Company did not hold any Level 3 investment securities.

The Company’s Level 3 liabilities as of April 2, 2022 and July 3, 2021 consist of contingent purchase consideration.

The Company has aggregate contingent liabilities related to its business and asset acquisitions completed during fiscal 2020 and 2019.

1 unchanged sentence

The fair value of contingent consideration liabilities is remeasured at each reporting period at the estimated fair value based on the inputs on the date of remeasurement, with the change in fair value recognized in the Selling, General and Administrative expense of the Consolidated Statements of Operations.

VIAVI SOLUTIONS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Fair Value Measurements

The Company’s assets and liabilities measured at fair value for the periods presented are as follows ( in millions ):

January 1, 2022 July 3, 2021

April 2, 2022 July 3, 2021

Total Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3

16 unchanged sentences

(1) Included in other non-current assets on the Company’s Consolidated Balance Sheets.

(2) Includes, as of January 1, 2022, $ 419.6 million in cash and cash equivalents, $ 3.1 million in restricted cash, and $ 6.1 million in other non-current assets on the Company’s Consolidated Balance Sheets.

(2) Includes, as of April 2, 2022, $ 292.7 million in cash and cash equivalents, $ 3.1 million in restricted cash, and $ 6.3 million in other non-current assets on the Company’s Consolidated Balance Sheets.

Includes, as of July 3, 2021, $ 401.0 million in cash and cash equivalents, $ 2.7 million in restricted cash, and $ 5.2 million in other non-current assets on the Company’s Consolidated Balance Sheets.

2 unchanged sentences

(5) Included in other current liabilities on the Company’s Consolidated Balance Sheets.

VIAVI SOLUTIONS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Other Fair Value Measures

Fair Value of Long-term Debt:

If measured at fair value in the Consolidated Balance Sheets, the Company’s 1.75 % Senior Convertible Notes (2023 Notes), 1.00 % Senior Convertible Notes (2024 Notes) and 3.75 % Senior Notes (2029 Notes) would be classified in Level 2 of the fair value hierarchy as they are not actively traded in the markets.

As of January 1, 2022, the fair value of the 2023 Notes, 2024 Notes, and 2029 Notes was approximately $ 148.4 million, $ 359.5 million and $ 400.6 million, respectively.

As of July 3, 2021, the fair value of the 2023 Notes and 2024 Notes was approximately $ 300.7 million and $ 646.9 million, respectively.

If measured at fair value in the Consolidated Balance Sheets, the Company’s 3.75 % Senior Notes (2029 Notes), 1.00 % Senior Convertible Notes (2024 Notes) and 1.75 % Senior Convertible Notes (2023 Notes) would be classified in Level 2 of the fair value hierarchy as they are not actively traded in the markets.

The Company’s long-term debt measured at fair value for the periods presented are as follows:

April 2, 2022 July 3, 2021

Total Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3

Long-term Debt:

3.75 % Senior Notes

$ 374.8 $ — $ 374.8 $ — $ — $ — $ — $ —

1.00 % Senior Convertible Notes

295.3 — 295.3 — 646.9 — 646.9 —

1.75 % Senior Convertible Notes

109.8 — 109.8 — 300.7 — 300.7 —

Total liabilities $ 779.9 $ — $ 779.9 $ — $ 947.6 $ — $ 947.6 $ —

See “Note 11.

Debt”, for further discussion of the Company’s long-term debt.

VIAVI SOLUTIONS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The following table presents changes in goodwill allocated to the Company’s reportable segments (in millions) :

3 unchanged sentences

Currency translation adjustments ( 7.3 ) ( 0.3 ) — ( 7.6 )

Balance as of January 1, 2022 $ 346.4 $ 4.4 $ 42.2 $ 393.0

Balance as of April 2, 2022 $ 342.4 $ 4.3 $ 42.2 $ 388.9

The Company tests goodwill for impairment at the reporting unit level annually during the fourth quarter of each fiscal year, or more frequently if events or circumstances indicate that the asset may be impaired.

In the fourth quarter of fiscal 2021, the Company reviewed goodwill under the qualitative assessment of the authoritative guidance and concluded that it was more likely than not that the fair value of each reporting unit exceeded its carrying amount and that no indication of impairment existed.

There were no events or changes in circumstances which triggered an impairment review during the three and six months ended January 1, 2022.

There were no events or changes in circumstances which triggered an impairment review during the three and nine months ended April 2, 2022.

Acquired Developed Technology and Other Intangibles

The following tables present details of the Company’s acquired developed technology, customer relationships and other intangibles ( in millions ):

As of January 1, 2022 Gross Carrying Amount Accumulated Amortization Net

As of April 2, 2022 Gross Carrying Amount Accumulated Amortization Net

Acquired developed technology $ 420.1 $ ( 375.3 ) $ 44.8

11 unchanged sentences

The following table presents the amortization recorded relating to acquired developed technology, customer relationships and other intangibles ( in millions ):

Three Months Ended Six Months Ended

January 1, 2022 January 2, 2021 January 1, 2022 January 2, 2021

Three Months Ended Nine Months Ended

April 2, 2022 April 3, 2021 April 2, 2022 April 3, 2021

Cost of revenues $ 7.4 $ 8.3 $ 22.7 $ 24.9

1 unchanged sentence

Total amortization of intangible assets $ 9.6 $ 16.6 $ 30.2 $ 49.8

Based on the carrying amount of acquired developed technology, customer relationships and other intangibles as of January 1, 2022, and assuming no future impairment of the underlying assets, the estimated future amortization is as follows ( in millions ):

Based on the carrying amount of acquired developed technology, customer relationships and other intangibles as of April 2, 2022, and assuming no future impairment of the underlying assets, the estimated future amortization is as follows ( in millions ):

Remainder of 2022 $ 9.4

2 unchanged sentences

The acquired developed technology, customer relationships and other intangibles balance are adjusted quarterly to record the effect of currency translation adjustments.

As of January 1, 2022 and July 3, 2021, the Company’s debt on the Consolidated Balance Sheets represented the carrying amount of the Senior Convertible and Senior Notes, net of unamortized issuance costs.

As of April 2, 2022 and July 3, 2021, the Company’s debt on the Consolidated Balance Sheets represented the carrying amount of the Senior Convertible and Senior Notes, net of unamortized issuance costs.

The following table presents the carrying amounts of the Company’s debt ( in millions ):

January 1, 2022 July 3, 2021

April 2, 2022 July 3, 2021

Principal amount of 1.00 % Senior Convertible Notes due 2024, short-term

2 unchanged sentences

Principal amount of 3.75 % Senior Notes, long-term

Unamortized 3.75 % Senior Notes debt issuance cost, long-term

Unamortized 3.75 % Senior Notes debt issuance cost

Principal amount of 1.75 % Senior Convertible Notes, long-term

Principal amount of 1.00 % Senior Convertible Notes, long-term

Unamortized Senior Convertible Notes debt issuance cost, long-term ( 1.8 ) ( 0.9 )

Unamortized Senior Convertible Notes debt issuance cost ( 1.4 ) ( 0.9 )

Long-term debt $ 706.4 $ 224.1

The Company was in compliance with all debt covenants as of January 1, 2022 and July 3, 2021.

The Company was in compliance with all debt covenants as of April 2, 2022 and July 3, 2021.

VIAVI SOLUTIONS INC.

5 unchanged sentences

The 2029 Notes mature on October 1, 2029 unless earlier redeemed or repurchased.

As of April 2, 2022, the expected remaining term of the 2029 Notes is 7.5 years.

Senior Secured Asset-Based Revolving Credit Facility

8 unchanged sentences

In addition, the Credit Agreement contains certain financial covenants that require the Company to maintain a fixed charge coverage ratio of at least 1.00 to 1.00 if excess availability under the facility is less than the greater of 10 % of the lesser of maximum revolver amount and borrowing base and $ 20 million.

As of January 1, 2022, we had no borrowings under this facility.

As of April 2, 2022, we had no borrowings under this facility and our available borrowing capacity was approximately $ 176.9 million.

Revolving Credit Facility

On May 5, 2020, the Company entered into a credit agreement with Wells Fargo as administrative agent, and other lender related parties.

The Company borrowed $ 150 million and repaid $ 150 million under this Credit Agreement during the six months ended January 1, 2022.

The Company borrowed $ 150 million and repaid $ 150 million under this Credit Agreement during the first quarter of fiscal 2022.

In connection with the entry into the Senior Secured Asset-Based Revolving Credit Facility noted above, the Company terminated this facility.

4 unchanged sentences

The Company issued $ 155.5 million aggregate principal of the 2023 Notes to certain holders of the 2033 Notes in exchange for $ 151.5 million principal of the 2033 Notes (the Exchange Transaction) and issued and sold $ 69.5 million aggregate principal amount of the 2023 Notes in a private placement to accredited institutional buyers (the Private Placement).

As of January 1, 2022, the expected remaining term of the 2023 Notes is 1.4 years.

The proceeds from the 2023 Notes Private Placement amounted to $ 67.3 million after issuance costs.

The 2023 Notes are an unsecured obligation of the Company and bear interest at an annual rate of 1.75 % payable in cash semi-annually in arrears on June 1st and December 1st of each year, beginning December 1, 2018.

As of April 2, 2022, the expected remaining term of the 2023 Notes is 1.2 years.

The 2023 Notes mature on June 1, 2023 unless earlier converted, redeemed or repurchased.

See Senior Note Settlement below.

1.00 % Senior Convertible Notes (2024 Notes)

3 unchanged sentences

The 2024 Notes are an unsecured obligation of the Company and bear interest at an annual rate of 1.00 % payable in cash semi-annually in arrears on March 1 and September 1 of each year.

As of April 2, 2022, the expected remaining term of the 2024 Notes is 1.9 years.

The 2024 Notes mature on March 1, 2024 unless earlier converted or repurchased.

As of January 1, 2022, the expected remaining term of the 2024 Notes is 2.2 years.

See Senior Note Settlement below.

During the fourth quarter of fiscal 2021, the closing price of the Company’s common stock exceeded 130 % of the applicable conversion price of the 2024 Notes on at least 20 of the last 30 consecutive trading days of the calendar quarter, causing the 2024 Notes to be convertible by the holders for the period of July 1, 2021 to September 30, 2021.

2 unchanged sentences

The requests were for trivial amounts.

In the first and second quarter of fiscal 2022 the closing price of the Company’s stock did not exceed 130 % of the applicable conversion price of the 2024 Notes for at least 20 of the last 30 consecutive trading days of the calendar quarter.

In the first three quarters of fiscal 2022 the closing price of the Company’s stock did not exceed 130 % of the applicable conversion price of the 2024 Notes for at least 20 of the last 30 consecutive trading days of the calendar quarter.

The carrying value of the 2024 Notes was reclassified to long-term debt as of October 2, 2021.

6 unchanged sentences

The Company recorded a loss of $ 6.4 million in connection with the settlement transactions which is presented as Loss on convertible note settlement in the Company’s Consolidated Statements of Operations.

After the transaction the outstanding aggregate principal amount of the 2023 Notes and 2024 Notes was $ 110.7 million and $ 253.7 million, respectively, in each case, with terms unchanged.

VIAVI SOLUTIONS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

On March 2, 2022, the Company entered into separate privately-negotiated agreements with certain holders of its 1.75 % Senior Convertible Notes due 2023 and 1.00 % Senior Convertible Notes due 2024.

The Company settled $ 23.2 million principal amount of the 2023 Notes and $ 26.8 million principal amount of the 2024 Notes in exchange for $ 64.7 million in cash.

After the transaction, the outstanding aggregate principal amount of the 2023 Notes and 2024 Notes was $ 87.4 million and $ 227.0 million, respectively, in each case, with terms unchanged.

Interest Expense

The following table presents the interest expense for contractual interest and amortization of debt issuance costs ( in millions ):

Three Months Ended Six Months Ended

January 1, 2022 January 2, 2021 January 1, 2022 January 2, 2021

Three Months Ended Nine Months Ended

April 2, 2022 April 3, 2021 April 2, 2022 April 3, 2021

Interest expense-contractual interest $ 5.0 $ 2.4 $ 12.6 $ 7.1

8 unchanged sentences

The Company's leases do not contain any material residual value guarantees.

For the three months ended January 1, 2022 and January 2, 2021, the total operating lease costs were $ 3.7 million and $ 3.4 million, respectively.

For the six months ended January 1, 2022 and January 2, 2021, the total operating lease costs were $ 7.2 million and $ 6.8 million, respectively.

Total variable lease costs were immaterial during the three and six months ended January 1, 2022 and January 2, 2021.

For the three months ended April 2, 2022 and April 3, 2021, the total operating lease costs were $ 3.5 million and $ 3.6 million, respectively.

For the nine months ended April 2, 2022 and April 3, 2021, the total operating lease costs were $ 10.7 million and $ 10.4 million, respectively.

Total variable lease costs were immaterial during the three and nine months ended April 2, 2022 and April 3, 2021.

The total operating costs were included in cost of revenues, research and development, and selling, general and administrative in the Company’s Consolidated Statements of Operations.

As of January 1, 2022, the weighted-average remaining lease term was 6.6 years, and the weighted-average discount rate was 4.7 %.

For the three months ended January 1, 2022 and January 2, 2021, cash paid for amounts included in the measurement of operating lease liabilities were $ 3.5 million and $ 3.7 million, respectively;

and operating ROU assets obtained in exchange of new operating lease liabilities were $ 6.4 million and $ 1.9 million, respectively.

For the six months ended January 1, 2022 and January 2, 2021, cash paid for amounts included in the measurement of operating lease liabilities were $ 8.7 million and $ 8.1 million, respectively;

As of April 2, 2022, the weighted-average remaining lease term was 7.3 years, and the weighted-average discount rate was 4.4 %.

For the three months ended April 2, 2022 and April 3, 2021, cash paid for amounts included in the measurement of operating lease liabilities were $ 3.8 million and $ 3.3 million, respectively;

and operating right-of-use (ROU) assets obtained in exchange of new operating lease liabilities were $ 3.9 million and $ 2.8 million, respectively.

For the nine months ended April 2, 2022 and April 3, 2021, cash paid for amounts included in the measurement of operating lease liabilities were $ 12.5 million and $ 11.4 million, respectively;

and operating ROU assets obtained in exchange of new operating lease liabilities were $ 10.3 million and $ 6.3 million, respectively.

VIAVI SOLUTIONS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The balance sheet information related to the Company’s operating leases is as follows ( in millions ):

January 1, 2022

April 2, 2022

Other non-current assets $ 45.9

3 unchanged sentences

Total operating lease liabilities $ 43.5

VIAVI SOLUTIONS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Future minimum operating lease payments as of January 1, 2022 are as follows ( in millions ):

Future minimum operating lease payments as of April 2, 2022 are as follows ( in millions ):

Fiscal Years Operating Leases

4 unchanged sentences

Present value of lease liabilities $ 43.5

Future minimum operating lease payments as of July 3, 2021, were as follows ( in millions ):

Fiscal Years Operating Leases

Thereafter 13.7

Total lease payments 50.3

Interest ( 7.9 )

Present value of lease liabilities $ 42.4

Restructuring and Related Charges

The Company restructuring events are primarily intended to reduce costs, consolidate operations, integrate various acquisitions, streamline product manufacturing and address market conditions.

During the three and six months ended January 1, 2022, the Company recorded restructuring related benefits of $ 0.1 million.

During the three and six months ended January 2, 2021, the Company recorded restructuring related charges of $ 0.2 million and benefits of $ 0.4 million, respectively.

There were no restructuring charges or benefits recorded during the three months ended April 2, 2022.

During the nine months ended April 2, 2022, the Company recorded restructuring related benefits of $ 0.1 million.

During the three and nine months ended April 3, 2021, the Company recorded restructuring related benefits of $ 0.4 million and of $ 0.8 million, respectively.

A summary of the activity in the restructuring plan is outlined below (in millions):

4 unchanged sentences

Restructuring and related benefits ( 0.1 )

End of period balance, January 1, 2022

(1) Included in other current liabilities on the Consolidated Balance Sheets as of July 3, 2021, respectively.

The Company recorded an income tax expense of $ 2.3 million and $ 15.9 million for the three and six months ended January 1, 2022, respectively.

The Company recorded an income tax expense of $ 12.5 million and $ 21.1 million for the three and six months ended January 2, 2021, respectively.

End of period balance, April 2, 2022

(1) Included in other current liabilities on the Consolidated Balance Sheets as of July 3, 2021.

VIAVI SOLUTIONS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The income tax provision for the three and six months ended January 1, 2022 primarily relates to income tax in certain foreign and state jurisdictions based on the Company’s forecasted pre-tax income or loss and offset by a $ 8.1 million tax benefit recognized upon the statute of limitations on a transfer pricing reserve in a non-US jurisdiction.

The income tax provision for the three and six months ended January 2, 2021 primarily relates to income tax in certain foreign and state jurisdictions based on the Company’s forecasted pre-tax income or loss.

The Company recorded an income tax provision of $ 9.4 million and $ 25.3 million for the three and nine months ended April 2, 2022, respectively.

The Company recorded an income tax provision of $ 14.2 million and $ 35.3 million for the three and nine months ended April 3, 2021, respectively.

The income tax provision for the three and nine months ended April 2, 2022 and April 3, 2021 primarily relates to income tax in certain foreign and state jurisdictions based on the Company’s forecasted pre-tax income or loss.

The income tax provision for the nine months ended April 2, 2022 includes a $ 8.1 million tax benefit recognized upon the statute of limitations on a transfer pricing reserve in a non-US jurisdiction.

The income tax provision recorded differs from the expected tax provision that would be calculated by applying the federal statutory rate to the Company’s income from continuing operations before taxes primarily due to the changes in valuation allowance for deferred tax assets attributable to the Company’s domestic and foreign income from continuing operations.

As of January 1, 2022, and July 3, 2021, the Company’s unrecognized tax benefits totaled $ 50.0 million and $ 55.5 million, respectively, and are included in deferred taxes and other non-current tax liabilities, net.

The Company had $ 1.7 million accrued for the payment of interest and penalties as of January 1, 2022.

As of April 2, 2022, and July 3, 2021, the Company’s unrecognized tax benefits totaled $ 50.2 million and $ 55.5 million, respectively, and are included in deferred taxes and other non-current tax liabilities, net.

The Company had $ 1.6 million accrued for the payment of interest and penalties as of April 2, 2022.

The timing and resolution of income tax examinations is uncertain, and the amounts ultimately paid, if any, upon resolution of issues raised by the taxing authorities may differ from the amounts accrued for each year.

5 unchanged sentences

Debt” for more details).

During the three months ended January 1, 2022, the Company repurchased 7.5 million shares of its common stock for $ 119.4 million under the 2021 Repurchase Plan.

As of January 1, 2022, the Company had remaining authorization of $ 70.6 million for future share repurchases under the 2021 Repurchase Plan.

During the three months ended April 2, 2022, the Company repurchased 4.2 million shares of its common stock for $ 70.6 million under the 2021 Repurchase Plan.

During the nine months ended April 2, 2022, the Company repurchased 11.7 million shares of its common stock for $ 190.0 million under the 2021 Repurchase Plan.

As of April 2, 2022, there is no remaining authorization under this plan.

In September 2019, the Board of Directors authorized a stock repurchase program (“2019 Repurchase Plan”) of up to $ 200 million of the Company’s common stock through open market or private transactions before September 30, 2021.

1 unchanged sentence

Under the 2019 Repurchase Plan, the Company may repurchase its common stock from time to time at the discretion of the Company’s management.

During the three months ended January 1, 2022 the Company did not repurchase any shares of its common stock under the 2019 Repurchase Plan.

The Company repurchased 0.5 million shares of its common stock for $ 8.5 million during the six months ended January 1, 2022 under the 2019 Repurchase Plan.

As of January 1, 2022, the Company had remaining authorization of $ 104.5 million for future share repurchases under the 2019 Repurchase Plan.

Under the 2021 Repurchase Plan and the 2019 Repurchase Plan the number of shares to be repurchased and the timing of such repurchases will be based on several factors, including business and financial market conditions.

During the three months ended April 2, 2022 the Company repurchased 0.5 million shares of its common stock for $ 8.1 million under the 2019 Repurchase Plan.

During the nine months ended April 2, 2022, the Company repurchased 1.0 million shares of its common stock for $ 16.6 million under the 2019 Repurchase Plan.

As of April 2, 2022, the Company had remaining authorization of $ 96.4 million for future share repurchases under the 2019 Repurchase Plan.

Under the 2019 Repurchase Plan the number of shares to be repurchased and the timing of such repurchases will be based on several factors, including business and financial market conditions.

VIAVI SOLUTIONS INC.

10 unchanged sentences

In addition, the actual number of shares awarded upon vesting of performance-based grants may vary from the target shares depending upon the achievement of the relevant performance or market-based conditions.

During the six months ended January 1, 2022 and January 2, 2021, the Company granted $ 2.1 million and $ 2.7 million time-based restricted stock awards, respectively.

The aggregate grant-date fair value of time-based restricted stock awards granted during the six months ended January 1, 2022 and January 2, 2021 were estimated to be $ 35.0 million and $ 35.7 million, respectively.

During the nine months ended April 2, 2022 and April 3, 2021, the Company granted $ 2.4 million and $ 3.2 million time-based restricted stock awards, respectively.

The aggregate grant-date fair value of time-based restricted stock awards granted during the nine months ended April 2, 2022 and April 3, 2021 were estimated to be $ 39.8 million and $ 44.8 million, respectively.

Time-based restricted stock awards granted to eligible employees generally vest in annual or quarterly installments over a period of four years , are subject to the employees’ continuing service to the Company and do not have an expiration date.

During the six months ended January 1, 2022 and January 2, 2021, the Company granted $ 0.4 million and $ 0.6 million, performance-based awards, respectively.

In addition, during the six months ended January 2, 2021, the Company granted an additional 0.1 million shares due to performance-based shares attained over target.

There were no performance-based shares attained over target during the six months ended January 1, 2022.

The aggregate grant-date fair value of performance-based awards granted during the six months ended January 1, 2022 and January 2, 2021 were estimated to be $ 7.9 million and $ 8.9 million, respectively.

During the nine months ended April 2, 2022 and April 3, 2021, the Company granted $ 0.4 million and $ 1.1 million, performance-based awards, respectively.

In addition, during the nine months ended April 3, 2021, the Company granted an additional 0.1 million shares due to performance-based shares attained over target.

There were no performance-based shares attained over target during the nine months ended April 2, 2022.

The aggregate grant-date fair value of performance-based awards granted during the nine months ended April 2, 2022 and April 3, 2021 were estimated to be $ 7.9 million and $ 15.7 million, respectively.

The majority of performance-based awards vest in equal annual installments over four years based on the attainment of certain performance measures and the employee’s continued service through the vest date.

Performance-based awards with market conditions were valued using a Monte Carlo simulation.

As of January 1, 2022, $ 79.4 million of unrecognized stock-based compensation costs remain to be amortized.

The impact on the Company’s results of operations of recording stock-based compensation by function for the three and six months ended January 1, 2022 and January 2, 2021, is as follows (in millions):

Three Months Ended Six Months Ended

January 1, 2022 January 2, 2021 January 1, 2022 January 2, 2021

As of April 2, 2022, $ 71.4 million of unrecognized stock-based compensation costs remain to be amortized.

The impact on the Company’s results of operations of recording stock-based compensation by function for the three and nine months ended April 2, 2022 and April 3, 2021, is as follows (in millions):

Three Months Ended Nine Months Ended

April 2, 2022 April 3, 2021 April 2, 2022 April 3, 2021

Cost of revenues $ 1.3 $ 1.2 $ 4.1 $ 3.6

2 unchanged sentences

Total stock-based compensation expense $ 12.8 $ 11.0 $ 39.7 $ 33.4

Approximately $ 1.2 million and $ 1.1 million of stock-based compensation was capitalized to inventory as of January 1, 2022 and January 2, 2021, respectively.

Approximately $ 1.2 million of stock-based compensation was capitalized to inventory as of April 2, 2022 and April 3, 2021.

VIAVI SOLUTIONS INC.

5 unchanged sentences

Benefits are generally based upon years of service and compensation or stated amounts for each year of service.

As of January 1, 2022, the U.K.

As of April 2, 2022, the U.K.

plan was partially funded while the other plans were unfunded.

1 unchanged sentence

For unfunded plans, the Company pays the post-retirement benefits when due.

During the six months ended January 1, 2022, the Company contributed $ 0.6 million to the U.K.

During the nine months ended April 2, 2022, the Company contributed $ 0.9 million to the U.K.

plan and $ 4.9 million to the other plans.

1 unchanged sentence

The following table presents the components of net periodic cost for the pension and benefits plans ( in millions ):

Three Months Ended Six Months Ended

January 1, 2022 January 2, 2021 January 1, 2022 January 2, 2021

Three Months Ended Nine Months Ended

April 2, 2022 April 3, 2021 April 2, 2022 April 3, 2021

Service cost $ — $ 0.1 $ 0.1 $ 0.3

7 unchanged sentences

The Company expects to incur cash outlays of approximately $ 9.0 million related to its defined benefit pension plans during fiscal 2022 to make current benefit payments and fund future obligations.

As of January 1, 2022, approximately $ 2.4 million had been incurred.

As of April 2, 2022, approximately $ 5.8 million had been incurred.

These payments have been estimated based on the same assumptions used to measure the Company’s projected benefit obligation at July 3, 2021.

11 unchanged sentences

law firm responsible for the error.

As of January 1, 2022, the related accrued pension liability was £ 7.0 million or $ 9.5 million.

As of April 2, 2022, the related accrued pension liability was £ 7.0 million or $ 9.2 million.

VIAVI SOLUTIONS INC.

4 unchanged sentences

Outstanding Letters of Credit, Performance Bonds and Other Claims

As of January 1, 2022, the Company had standby letters of credit of $ 9.2 million, performance bonds and other claims of $ 2.4 million collateralized by restricted cash.

As of April 2, 2022, the Company had standby letters of credit of $ 9.4 million, performance bonds and other claims of $ 2.3 million collateralized by restricted cash.

Product Warranties

The following table presents the changes in the Company’s warranty reserve during the three and six months ended January 1, 2022 and January 2, 2021, ( in millions ):

Three Months Ended Six Months Ended

January 1, 2022 January 2, 2021 January 1, 2022 January 2, 2021

The following table presents the changes in the Company’s warranty reserve during the three and nine months ended April 2, 2022 and April 3, 2021, ( in millions ):

Three Months Ended Nine Months Ended

April 2, 2022 April 3, 2021 April 2, 2022 April 3, 2021

Balance as of beginning of period $ 10.8 $ 9.6 $ 9.7 $ 9.4

29 unchanged sentences

Additionally, the Company does not specifically identify and allocate all assets by operating segment.

The following tables present information on the Company’s reportable segments for the three months ended January 1, 2022 and January 2, 2021 ( in millions ):

Three Months Ended January 1, 2022

The following tables present information on the Company’s reportable segments for the three months ended April 2, 2022 and April 3, 2021 ( in millions ):

Three Months Ended April 2, 2022

Network and Service Enablement

7 unchanged sentences

Operating margin 14.9 % 39.3 % 12.9 %

Three Months Ended January 2, 2021

Three Months Ended April 3, 2021

Network and Service Enablement

10 unchanged sentences

Three Months Ended

January 1, 2022 January 2, 2021

April 2, 2022 April 3, 2021

Corporate reconciling items impacting gross profit:

2 unchanged sentences

Amortization of intangibles ( 7.4 ) ( 8.3 )

Other benefits unrelated to core operating performance (1)

Other (charges) benefits unrelated to core operating performance (1)

GAAP gross profit $ 186.9 $ 182.0

4 unchanged sentences

Change in fair value of contingent liability — 2.3

Other (charges) benefits unrelated to core operating performance (1)

Restructuring and related benefits (charges) 0.1 ( 0.2 )

Other charges unrelated to core operating performance (1)

( 4.5 ) ( 0.6 )

Restructuring and related benefits — 0.4

GAAP operating income from continuing operations $ 40.8 $ 35.9

(1) During the three months ended January 1, 2022 and January 2, 2021, other charges unrelated to core operating performance primarily consisted of certain acquisition and integration related changes, transformational initiatives such as site consolidations, reorganization, and loss on disposal of long-lived assets.

Six Months Ended January 1, 2022

(1) During the three months ended April 2, 2022 and April 3, 2021, other (charges) benefits unrelated to core operating performance primarily consisted of certain acquisition and integration related charges, transformational initiatives such as site consolidations, reorganization, and loss on disposal of long-lived assets.

Nine Months Ended April 2, 2022

Network and Service Enablement

10 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Six Months Ended January 2, 2021

Nine Months Ended April 3, 2021

Network and Service Enablement

8 unchanged sentences

Operating margin 9.4 % 46.2 % 12.3 %

Six Months Ended

January 1, 2022 January 2, 2021

Nine Months Ended

April 2, 2022 April 3, 2021

Corporate reconciling items impacting gross profit:

2 unchanged sentences

Amortization of intangibles ( 22.7 ) ( 24.9 )

Other benefits unrelated to core operating performance (1)

Other (charges) benefits unrelated to core operating performance (1)

GAAP gross profit $ 572.4 $ 531.5

8 unchanged sentences

GAAP operating income from continuing operations $ 137.0 $ 109.5

(1) During the six months ended January 1, 2022 and January 2, 2021, other charges unrelated to core operating performance primarily consisted of certain acquisition and integration related changes, transformational initiatives such as site consolidations, reorganization, and loss on disposal of long-lived assets.

(1) During the nine months ended April 2, 2022 and April 3, 2021, other (charges) benefits unrelated to core operating performance primarily consisted of certain acquisition and integration related charges, transformational initiatives such as site consolidations, reorganization, and loss on disposal of long-lived assets.

VIAVI SOLUTIONS INC.

4 unchanged sentences

For example, certain customers may request shipment of the Company’s product to a contract manufacturer in one country, which may differ from the location of their end customers.

The following table presents net revenue by the three geographic regions in which the Company operates and net revenue from countries that exceeded 10% of the Company’s total net revenue for the three and six months ended January 1, 2022 and January 2, 2021 (in millions):

The following table presents net revenue by the three geographic regions in which the Company operates and net revenue from countries that exceeded 10% of the Company’s total net revenue for the three and nine months ended April 2, 2022 and April 3, 2021 (in millions):

Three Months Ended

January 1, 2022 January 2, 2021

April 2, 2022 April 3, 2021

Product Revenue Service Revenue Total Product Revenue Service Revenue Total

10 unchanged sentences

Total net revenue $ 275.8 $ 39.7 $ 315.5 $ 266.6 $ 36.8 $ 303.4

Six Months Ended

January 1, 2022 January 2, 2021

Nine Months Ended

April 2, 2022 April 3, 2021

Product Revenue Service Revenue Total Product Revenue Service Revenue Total

10 unchanged sentences

Total net revenue $ 842.3 $ 114.8 $ 957.1 $ 776.6 $ 111.4 $ 888.0

VIAVI SOLUTIONS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Subsequent Events

During the period between January 1, 2022 and February 4, 2022, the Company repurchased approximately 3.9 million shares of its common stock, under the 2021 Repurchase Plan approved by the Board in September 2021, for approximately $ 64.4 million.

The Company has approximately $ 6.2 million remaining available for future repurchase of the $ 190 million authorized under the 2021 Repurchase Plan.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements