What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2024-05-03 compared with 2024-02-02 · 217 added, 219 removed, 730 unchanged (37% of the section changed)

3 unchanged sentences

(in millions, except per share data)

Three Months Ended Six Months Ended

December 30, 2023 December 31, 2022 December 30, 2023 December 31, 2022

Three Months Ended Nine Months Ended

March 30, 2024 April 1, 2023 March 30, 2024 April 1, 2023

Product revenue $ 207.3 $ 205.2 $ 623.8 $ 714.4

11 unchanged sentences

Amortization of other intangibles 1.5 2.1 5.0 6.5

Restructuring and related benefits ( 0.1 ) — ( 0.9 ) —

Restructuring and related charges (benefits) 0.1 10.2 ( 0.8 ) 10.2

Total operating expenses 149.8 143.1 403.8 422.2

Income from operations 22.4 22.9 38.4 72.7

(Loss) income from operations ( 11.9 ) ( 2.1 ) 26.5 70.6

Loss on convertible note modification (Note 11) — ( 2.2 ) — ( 2.2 )

Interest and other income, net 4.0 1.6 18.0 4.9

Interest expense ( 7.7 ) ( 6.7 ) ( 23.4 ) ( 19.0 )

Income before income taxes 18.3 18.9 36.7 63.7

(Loss) income before income taxes ( 15.6 ) ( 9.4 ) 21.1 54.3

Provision for income taxes 9.0 6.0 25.2 28.7

Net income $ 10.7 $ 8.4 $ 20.5 $ 41.0

Net income per share:

Net (loss) income $ ( 24.6 ) $ ( 15.4 ) $ ( 4.1 ) $ 25.6

Net (loss) income per share:

Basic $ ( 0.11 ) $ ( 0.07 ) $ ( 0.02 ) $ 0.11

5 unchanged sentences

VIAVI SOLUTIONS INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

(in millions)

Three Months Ended Six Months Ended

December 30, 2023 December 31, 2022 December 30, 2023 December 31, 2022

Net income $ 10.7 $ 8.4 $ 20.5 $ 41.0

Other comprehensive income (loss):

Three Months Ended Nine Months Ended

March 30, 2024 April 1, 2023 March 30, 2024 April 1, 2023

Net (loss) income $ ( 24.6 ) $ ( 15.4 ) $ ( 4.1 ) $ 25.6

Other comprehensive (loss) income:

Net change in cumulative translation adjustment, net of tax ( 11.8 ) 13.4 ( 2.5 ) 14.1

Amortization of net actuarial gains and other pension adjustments

Unrealized holding loss arising during period — ( 0.3 ) — ( 0.3 )

Amortization of net actuarial losses and other pension adjustments

( 0.8 ) — ( 0.9 ) ( 0.3 )

Net change in accumulated other comprehensive loss ( 12.6 ) 13.1 ( 3.4 ) 13.5

Comprehensive income $ 40.4 $ 51.7 $ 29.7 $ 41.4

Comprehensive (loss) income $ ( 37.2 ) $ ( 2.3 ) $ ( 7.5 ) $ 39.1

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

2 unchanged sentences

(in millions, except share and par value data)

December 30, 2023 July 1, 2023

March 30, 2024 July 1, 2023

Current assets:

26 unchanged sentences

1 million shares authorized,

no shares issued or outstanding at December 30, 2023 and July 1, 2023

no shares issued or outstanding at March 30, 2024 and July 1, 2023

Common stock, $ 0.001 par value;

1 billion shares authorized;

223 million shares at December 30, 2023 and 222 million shares at July 1, 2023, issued and outstanding

223 million shares at March 30, 2024 and 222 million shares at July 1, 2023, issued and outstanding

Additional paid-in capital 70,459.1 70,427.3

7 unchanged sentences

(in millions)

Six Months Ended

December 30, 2023 December 31, 2022

Nine Months Ended

March 30, 2024 April 1, 2023

OPERATING ACTIVITIES:

Net income $ 20.5 $ 41.0

Adjustments to reconcile net income to net cash provided by operating activities:

Net (loss) income $ ( 4.1 ) $ 25.6

Adjustments to reconcile net (loss) income to net cash provided by operating activities:

Depreciation expense 29.1 26.4

1 unchanged sentence

Stock-based compensation 36.6 38.8

Loss on convertible note modification — 2.2

Amortization of debt issuance costs 5.6 2.3

23 unchanged sentences

FINANCING ACTIVITIES:

Proceeds from issuance of debt $ — $ 118.0

Payment of debt issuance costs — ( 3.9 )

Retirement of convertible notes upon maturity ( 96.4 ) —

Repurchase and retirement of common stock ( 10.0 ) ( 73.9 )

2 unchanged sentences

Proceeds from employee stock purchase plan 6.3 7.9

Payment of acquisition related obligations ( 1.0 ) ( 0.7 )

Payment of acquisition related contingent consideration ( 0.9 ) ( 0.5 )

Net cash used in financing activities $ ( 18.3 ) $ ( 52.7 )

Payment of acquisition related contingent considerations and obligations ( 4.0 ) ( 7.3 )

Net cash (used in) provided by financing activities $ ( 115.3 ) $ 29.3

Effect of exchange rates on cash, cash equivalents and restricted cash $ ( 0.2 ) $ 5.8

Net increase (decrease) in cash, cash equivalents and restricted cash 37.0 ( 75.9 )

Net (decrease) increase in cash, cash equivalents and restricted cash ( 52.5 ) 20.4

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 $ 9.1 million and $ 12.9 million as of July 1, 2023 and July 2, 2022, respectively.

(2) These amounts include both current and non-current balances of restricted cash totaling $ 8.9 million and $ 12.8 million as of December 30, 2023 and December 31, 2022, respectively.

(2) These amounts include both current and non-current balances of restricted cash totaling $ 8.9 million and $ 12.6 million as of March 30, 2024 and April 1, 2023, respectively.

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

2 unchanged sentences

(in millions)

Three Months Ended December 30, 2023

Three Months Ended March 30, 2024

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

Balance at September 30, 2023 222.4 $ 0.2 $ 70,432.4 $ ( 69,600.9 ) $ ( 156.5 ) $ 675.2

Net income — — — 10.7 — 10.7

Other comprehensive income — — — — 29.7 29.7

Balance at December 30, 2023 222.6 $ 0.2 $ 70,444.8 $ ( 69,590.2 ) $ ( 126.8 ) $ 728.0

Net loss — — — ( 24.6 ) — ( 24.6 )

Other comprehensive loss — — — — ( 12.6 ) ( 12.6 )

Shares issued under employee stock plans, net of tax 0.6 — 1.5 — — 1.5

Stock-based compensation — — 12.8 — — 12.8

Balance at December 30, 2023 222.6 $ 0.2 $ 70,444.8 $ ( 69,590.2 ) $ ( 126.8 ) $ 728.0

Three Months Ended December 31, 2022

Balance at March 30, 2024 223.2 $ 0.2 $ 70,459.1 $ ( 69,614.8 ) $ ( 139.4 ) $ 705.1

Three Months Ended April 1, 2023

Additional Paid-In Capital

1 unchanged sentence

Accumulated Other Comprehensive Loss

Balance at October 1, 2022 226.8 $ 0.2 $ 70,375.9 $ ( 69,528.4 ) $ ( 199.3 ) $ 648.4

Net income — — — 8.4 — 8.4

Balance at December 31, 2022 224.8 $ 0.2 $ 70,388.8 $ ( 69,545.2 ) $ ( 156.0 ) $ 687.8

Net loss — — — ( 15.4 ) — ( 15.4 )

Other comprehensive income — — — — 13.1 13.1

2 unchanged sentences

Repurchase of common stock ( 2.8 ) — — ( 30.0 ) — ( 30.0 )

Balance at December 31, 2022 224.8 $ 0.2 $ 70,388.8 $ ( 69,545.2 ) $ ( 156.0 ) $ 687.8

Six Months Ended December 30, 2023

Convertible note modification (Note 11) — — 10.1 — — 10.1

Balance at April 1, 2023 222.4 $ 0.2 $ 70,415.6 $ ( 69,590.6 ) $ ( 142.9 ) $ 682.3

Nine Months Ended March 30, 2024

Additional Paid-In Capital

2 unchanged sentences

Balance at July 1, 2023 221.5 $ 0.2 $ 70,427.3 $ ( 69,600.7 ) $ ( 136.0 ) $ 690.8

Net income — — — 20.5 — 20.5

Other comprehensive income — — — — 9.2 9.2

Net loss — — — ( 4.1 ) — ( 4.1 )

Other comprehensive loss — — — — ( 3.4 ) ( 3.4 )

Shares issued under employee stock plans, net of tax 2.7 — ( 4.8 ) — — ( 4.8 )

1 unchanged sentence

Repurchase of common stock ( 1.0 ) — — ( 10.0 ) — ( 10.0 )

Balance at December 30, 2023 222.6 $ 0.2 $ 70,444.8 $ ( 69,590.2 ) $ ( 126.8 ) $ 728.0

Six Months Ended December 31, 2022

Balance at March 30, 2024 223.2 $ 0.2 $ 70,459.1 $ ( 69,614.8 ) $ ( 139.4 ) $ 705.1

Nine Months Ended April 1, 2023

Additional Paid-In Capital

2 unchanged sentences

Balance at July 2, 2022 226.4 $ 0.2 $ 70,370.2 $ ( 69,542.3 ) $ ( 156.4 ) $ 671.7

Net loss — — — 41.0 — 41.0

Net income — — — 25.6 — 25.6

Other comprehensive income — — — — 13.5 13.5

2 unchanged sentences

Repurchase of common stock ( 6.3 ) — — ( 73.9 ) — ( 73.9 )

Balance at December 31, 2022 224.8 $ 0.2 $ 70,388.8 $ ( 69,545.2 ) $ ( 156.0 ) $ 687.8

Convertible note modification (Note 11) — — 10.1 — — 10.1

Balance at April 1, 2023 222.4 $ 0.2 $ 70,415.6 $ ( 69,590.6 ) $ ( 142.9 ) $ 682.3

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, we, our and us) for the three and six months ended December 30, 2023 and December 31, 2022 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, we, our and us) for the three and nine months ended March 30, 2024 and April 1, 2023 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.

3 unchanged sentences

For further information please refer to the Consolidated Financial Statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended July 1, 2023.

There have been no material changes to the Company’s accounting policies during the three and six months ended December 30, 2023 as compared to the significant accounting policies presented in “Note 1.

There have been no material changes to the Company’s accounting policies during the three and nine months ended March 30, 2024 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 1, 2023 on Form 10-K, filed with the SEC on August 17, 2023.

1 unchanged sentence

GAAP for complete financial statements.

The results for the three and six months ended December 30, 2023 and December 31, 2022 may not be indicative of results for the fiscal year ending June 29, 2024 or any future periods.

The results for the three and nine months ended March 30, 2024 and April 1, 2023 may not be indicative of results for the fiscal year ending June 29, 2024 or any future periods.

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

6 unchanged sentences

Certain reclassifications of prior period balances have been made to conform to current presentation.

Refer to “Note 9.

Goodwill” and “Note 19.

Operating Segments and Geographic Information” for further information.

Effective for the first quarter of fiscal 2024, management of certain products moved from the SE segment to the NE segment to better align with operational and go-to-market strategies.

As a result, prior period balances have been recast in our operating segment tables for the three and nine months ended April 1, 2023 in “Note 19.

Operating Segments and Geographic Information” and NE and SE goodwill balances as of July 1, 2023 in “Note 9.

Use of Estimates

The preparation of the Consolidated Financial Statements in conformity with U.S.

GAAP requires management to make estimates and assumptions that effect the reported amount of assets and liabilities at the date of the financial statements, the reported amount of net revenues and expenses and the disclosure of commitments and contingencies during the reporting periods.

GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities at the date of the financial statements, the reported amount of net revenue and expense and the disclosure of commitments and contingencies during the reporting periods.

Estimates are based on historical factors, current circumstances and the experience and judgment of management.

Under changed conditions the Company’s reported financial positions or results of operations may be materially impacted when using different estimates and assumptions, particularly with respect to significant accounting policies.

Under changed conditions, the Company’s reported financial position or results of operations may be materially impacted when using different estimates and assumptions, particularly with respect to significant accounting policies.

If estimates or assumptions differ from actual results, subsequent periods are adjusted to reflect more readily available information.

2 unchanged sentences

Recently Issued Accounting Pronouncements

SEC Climate Rules

In March 2024, the SEC adopted final rules on the enhancement and standardization of climate-related disclosures for investors.

The final rules require disclosure of, among other things, material climate-related risks and their impact;

activities to mitigate or adapt to material climate-related risks;

governance and oversight of climate-related risks;

material climate-related targets or goals and their financial impact;

and material Scope 1 and/or Scope 2 greenhouse gas emissions with an accompanying assurance report required following an initial transition period, at a limited assurance level, and then following an additional transition period, at a reasonable assurance level.

In addition, the effects of severe weather events and other natural conditions, subject to certain thresholds, and amounts related to carbon offsets and renewable energy credits or certificates are required to be disclosed in the notes to the audited financial statements in certain circumstances.

On April 4, 2024, the SEC voluntarily stayed the implementation of the final rules pending the completion of judicial review of the consolidated challenges to the final rules by the Court of Appeals for the Eighth Circuit.

The final rules, as originally issued, would be effective for the Company in various fiscal years, starting with its Annual Report on Form 10-K for fiscal year 2026.

Disclosures pursuant to the final rules, as originally issued, would be required prospectively, with information for prior periods required only to the extent it was previously disclosed in an SEC filing.

The Company is currently evaluating the impact of the final rules on its Consolidated Financial Statements and disclosures.

Accounting Standards Issued But Not Yet Adopted

In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures (Topic 740), to enhance the transparency and decision usefulness of income tax disclosures through changes to the rate reconciliation and income taxes paid information.

This guidance is effective for fiscal years beginning after December 15, 2024 (fiscal 2026 for the Company), with early and retrospective adoption permitted.

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

In November 2023, the FASB issued ASU 2023-07, Improvements to Reportable Segment Disclosures (Topic 280), to improve reportable segment disclosures, primarily through enhanced disclosures about significant segment expenses.

The amendments in this update will require public entities to disclose significant segment expenses included within segment profit and loss that are regularly provided to the Company’s Chief Executive Officer as the Company’s Chief Operating Decision Maker (CODM).

This guidance is effective for fiscal years beginning after December 15, 2023 (fiscal 2025 for the Company), and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted and will be applied retrospectively to all prior periods presented in the financial statements.

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

In October 2023, the FASB issued ASU 2023-06, Disclosure Improvements - Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative .

4 unchanged sentences

As we are currently subject to these SEC requirements, this ASU is not expected to have a material impact on our Consolidated Financial Statements or related disclosures.

The amendments in this update will require public entities to disclose significant segment expenses that are regularly provided to the Company’s Chief Executive Officer, as the Company’s Chief Operating Decision Maker (CODM) and included within segment profit and loss.

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

This guidance is effective for fiscal years beginning after December 15, 2024 (fiscal 2026 for the Company), with early and retrospective adoption permitted.

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

We reviewed all other accounting pronouncements issued during the six months ended December 30, 2023 and concluded that they were not applicable to the Company.

We reviewed all other accounting pronouncements issued during the nine months ended March 30, 2024 and concluded that they were not applicable to the Company.

VIAVI SOLUTIONS INC.

1 unchanged sentence

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

December 30, 2023 December 31, 2022 December 30, 2023 December 31, 2022

Net income $ 10.7 $ 8.4 $ 20.5 $ 41.0

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

Three Months Ended Nine Months Ended

March 30, 2024 April 1, 2023 March 30, 2024 April 1, 2023

Net (loss) income $ ( 24.6 ) $ ( 15.4 ) $ ( 4.1 ) $ 25.6

Weighted-average shares outstanding:

3 unchanged sentences

Diluted 223.0 224.1 222.5 227.6

Net income per share:

Net (loss) income per share:

Basic $ ( 0.11 ) $ ( 0.07 ) $ ( 0.02 ) $ 0.11

1 unchanged sentence

(1) Represents the dilutive impact for the Company’s 1.75 % Senior Convertible Notes due 2023 (2023 Notes), the 1.00 % Senior Convertible Notes due 2024 (2024 Notes) and the 1.625 % Senior Convertible Notes due 2026 (2026 Notes).

As of December 30, 2023, the if-converted value is less than the outstanding principal of the 2024 and 2026 Notes, respectively, and are therefore anti-dilutive.

As of March 30, 2024, the if-converted value is less than the outstanding principal of the 2026 Notes and are therefore anti-dilutive.

Refer to “Note 11.

Debt” for more details.

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

December 30, 2023 December 31, 2022 December 30, 2023 December 31, 2022

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

Three Months Ended Nine Months Ended

March 30, 2024 April 1, 2023 March 30, 2024 April 1, 2023

Restricted stock units 8.4 4.3 4.9 3.6

3 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 December 30, 2023, the changes in accumulated other comprehensive loss, net of tax, by component were as follows ( in millions ):

For the nine months ended March 30, 2024, 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 1, 2023 $ ( 5.3 ) $ ( 125.4 ) $ ( 5.3 ) $ ( 136.0 )

Other comprehensive income before reclassification — 9.3 — 9.3

Other comprehensive loss before reclassification — ( 2.5 ) ( 1.0 ) ( 3.5 )

Amounts reclassified out of accumulated other comprehensive loss — — 0.1 0.1

Net current-period other comprehensive income (loss) — 9.3 ( 0.1 ) 9.2

Ending balance as of December 30, 2023 $ ( 5.3 ) $ ( 116.1 ) $ ( 5.4 ) $ ( 126.8 )

(1) The amount reclassified out of accumulated other comprehensive loss represents the amortization of actuarial gains included as a component of Cost of revenues, Research and development (R&D) and Selling, general and administrative (SG&A) in the Consolidated Statements of Operations, net of reclassification adjustments, for the six months ended December 30, 2023.

There was no tax impact for the six months ended December 30, 2023.

Net current-period other comprehensive loss — ( 2.5 ) ( 0.9 ) ( 3.4 )

Ending balance as of March 30, 2024 $ ( 5.3 ) $ ( 127.9 ) $ ( 6.2 ) $ ( 139.4 )

There was no tax impact for the nine months ended March 30, 2024.

Refer to “Note 17.

2 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Jackson Labs Technologies, LLC

On October 5, 2022, the Company acquired all of the equity of Jackson Labs Technologies, LLC (Jackson Labs), a privately held company which specializes in Position, Navigation and Timing (PNT) solutions for critical infrastructure serving both military and civilian applications.

15 unchanged sentences

In connection with these acquisitions, the Company recorded developed technology intangibles of $ 2.5 million which are being amortized over their estimated useful life of five years .

On July 18, 2022, the Company completed an acquisition accounted for as a business combination consisting of cash paid at closing of $ 17.5 million and $ 2.0 million of indemnity holdback.

In connection with this acquisition, the Company recorded approximately $ 11.2 million of goodwill, $ 5.1 million of developed technology and $ 1.8 million of deferred tax liability.

The acquired developed technology asset is being amortized over its estimated useful life of four years .

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 December 30, 2023 and December 31, 2022 ( in millions ):

Three Months Ended Six Months Ended

December 30, 2023 December 31, 2022 December 30, 2023 December 31, 2022

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 March 30, 2024 and April 1, 2023 ( in millions ):

Three Months Ended Nine Months Ended

March 30, 2024 April 1, 2023 March 30, 2024 April 1, 2023

Beginning period balance $ 10.6 $ 33.2 $ 19.7 $ 2.5

9 unchanged sentences

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

As of December 30, 2023, and July 1, 2023, the Company had total unbilled receivables of $ 13.6 million and $ 13.7 million, respectively.

As of March 30, 2024, and July 1, 2023, the Company had total unbilled receivables of $ 12.0 million and $ 13.7 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.

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

December 30, 2023

Three Months Ended Six Months Ended

The following table presents the activity related to deferred revenue ( in millions ):

March 30, 2024

Three Months Ended Nine Months Ended

Deferred revenue:

6 unchanged sentences

(2) Revenue recognized during the period represents releases from the balance at the beginning of the period as well as releases from the current period deferrals.

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 December 30, 2023, was $ 248.4 million.

The value of the transaction price allocated to remaining performance obligations as of March 30, 2024, was $ 252.7 million.

The Company expects to recognize approximately 89 % of remaining performance obligations as revenue within the next 12 months, and the remainder thereafter.

2 unchanged sentences

July 1, 2023 Charged to Costs and Expenses Deductions (1)

December 30, 2023

March 30, 2024

Allowance for credit losses $ 1.0 $ 0.9 $ ( 0.4 ) $ 1.5

2 unchanged sentences

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

December 30, 2023 July 1, 2023

March 30, 2024 July 1, 2023

Finished goods $ 46.0 $ 49.0

6 unchanged sentences

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

December 30, 2023 July 1, 2023

March 30, 2024 July 1, 2023

Refundable income taxes $ 29.2 $ 27.6

1 unchanged sentence

Advances to contract manufacturers 6.1 9.8

Fair value of forward contracts 5.4 3.5

Transaction tax receivables 3.4 5.1

Asset held for sale 2.5 2.5

Other current assets 7.4 7.1

Fair value of forward contracts 1.5 3.5

Other 9.4 7.1

Prepayments and other current assets $ 66.1 $ 72.1

1 unchanged sentence

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

December 30, 2023 July 1, 2023

Operating ROU assets (Note 12) $ 37.5 $ 40.4

March 30, 2024 July 1, 2023

Operating right-of-use (ROU) assets (Note 12) $ 37.7 $ 40.4

Long-term restricted cash 5.3 4.6

2 unchanged sentences

Debt issuance cost - Revolving Credit Facility 2.2 2.8

Other non-current assets 9.9 8.7

Other 10.2 8.7

Other non-current assets $ 60.4 $ 61.7

1 unchanged sentence

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

December 30, 2023 July 1, 2023

March 30, 2024 July 1, 2023

Operating lease liabilities (Note 12) $ 9.9 $ 10.1

1 unchanged sentence

Income tax payable 6.5 4.4

Warranty accrual 4.0 4.2

Acquisition related holdback and related accruals 3.0 4.1

Transaction tax payable 4.3 4.3

Warranty accrual 3.6 4.2

Fair value of forward contracts 3.0 2.4

Acquisition related holdback and related accruals 0.9 4.1

Restructuring accrual (Note 13) 0.8 5.8

6 unchanged sentences

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

December 30, 2023 July 1, 2023

March 30, 2024 July 1, 2023

Pension and post-employment benefits $ 52.9 $ 53.2

1 unchanged sentence

Long-term deferred revenue 24.2 23.4

Deferred tax liability 19.1 13.9

Uncertain tax position 16.2 15.8

Financing obligation 15.7 15.8

Deferred tax liability 13.5 13.9

Fair value of contingent consideration (Note 5) 11.2 18.6

5 unchanged sentences

Short-Term Investments

As of December 30, 2023, the Company’s short-term investments of $ 25.0 million were comprised of a 30 -day term deposit of $ 23.3 million and trading securities related to the deferred compensation plan of $ 1.7 million, of which $ 1.5 million was invested in equity securities, $ 0.1 million was invested in debt securities and $ 0.1 million was invested in money market instruments.

As of July 1, 2023, the Company’s short-term investments of $ 14.6 million were comprised of a 30 -day term deposit of $ 13.1 million and trading securities related to the deferred compensation plan of $ 1.5 million, of which $ 1.2 million was invested in equity securities, $ 0.1 million was invested in debt securities and $ 0.2 million was invested in money market instruments.

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

As of March 30, 2024, the Company’s short-term investments of $ 28.4 million were comprised of 30-day term deposits of $ 27.0 million and trading securities related to the deferred compensation plan of $ 1.4 million, of which $ 1.3 million was invested in equity securities and $ 0.1 million was invested in debt securities.

As of July 1, 2023, the Company’s short-term investments of $ 14.6 million were comprised of a 30-day term deposit of $ 13.1 million and trading securities related to the deferred compensation plan of $ 1.5 million, of which $ 1.2 million was invested in equity securities, $ 0.2 million was invested in money market instruments and $ 0.1 million was invested in debt securities.

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

Non-Designated Foreign Currency Forward Contracts

3 unchanged sentences

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

As of December 30, 2023, the Company had forward contracts that were effectively closed but not settled with the counterparties as of the balance sheet date.

As of March 30, 2024, the Company had forward contracts that were effectively closed but not settled with the counterparties as of the balance sheet date.

Therefore, the fair value of these contracts of $ 1.5 million and $ 3.0 million is reflected as Prepayments and other current assets and Other current liabilities on the Consolidated Balance Sheets, respectively.

2 unchanged sentences

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

As of December 30, 2023 and July 1, 2023, the notional amounts of the forward contracts that the Company held to purchase foreign currencies were $ 96.4 million and $ 87.5 million, respectively, and the notional amounts of forward contracts that the Company held to sell foreign currencies were $ 82.4 million and $ 19.3 million, respectively.

As of March 30, 2024 and July 1, 2023, the notional amounts of the forward contracts that the Company held to purchase foreign currencies were $ 76.1 million and $ 87.5 million, respectively, and the notional amounts of forward contracts that the Company held to sell foreign currencies were $ 20.1 million and $ 19.3 million, respectively.

VIAVI SOLUTIONS INC.

2 unchanged sentences

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

The foreign exchange forward contracts incurred a gain of $ 3.4 million and loss of $ 0.1 million for the three and six months ended December 30, 2023, respectively, and a gain of $ 6.0 million and loss of $ 0.7 million for the three and six months ended December 31, 2022, respectively.

The foreign exchange forward contracts incurred losses of $ 0.8 million and $ 0.9 million for the three and nine months ended March 30, 2024, respectively, and gains of $ 0.8 million and less than $ 0.1 million for the three and nine months ended April 1, 2023, respectively.

Fair Value Measurements

12 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 December 30, 2023 and July 1, 2023, the Company did not hold any Level 3 investment securities.

As of March 30, 2024 and July 1, 2023, the Company did not hold any Level 3 investment securities.

The Company’s Level 3 liabilities consist of contingent purchase consideration liabilities related to business acquisitions.

1 unchanged sentence

The fair value of certain earn-out liabilities is derived using the estimated probability of success of achieving the earn-out milestones discounted to present value.

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 (SG&A) expense of the Consolidated Statements of Operations.

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 as a component of Selling, general and administrative (SG&A) expense in the Consolidated Statements of Operations.

VIAVI SOLUTIONS INC.

2 unchanged sentences

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

December 30, 2023 July 1, 2023

March 30, 2024 July 1, 2023

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 Consolidated Balance Sheets.

(2) Includes, as of December 30, 2023, $ 370.6 million in Cash and cash equivalents, $ 3.0 million in Restricted cash and $ 4.1 million in Other non-current assets on the Consolidated Balance Sheets.

(2) Includes, as of March 30, 2024, $ 239.0 million in Cash and cash equivalents, $ 3.4 million in Restricted cash and $ 3.6 million in Other non-current assets on the Consolidated Balance Sheets.

Includes, as of July 1, 2023, $ 336.5 million in Cash and cash equivalents, $ 4.3 million in Restricted cash and $ 4.0 million in Other non-current assets on the Consolidated Balance Sheets.

2 unchanged sentences

(5) Included in Other current liabilities on the Consolidated Balance Sheets.

(6) As of December 30, 2023, included in Other non-current liabilities on the Consolidated Balance Sheets.

(6) As of March 30, 2024, included in Other non-current liabilities on the Consolidated Balance Sheets.

As of July 1, 2023, includes certain amounts in Other current liabilities and Other non-current liabilities on the Consolidated Balance Sheets.

2 unchanged sentences

If measured at fair value on the Consolidated Balance Sheets, the Company’s 3.75 % Senior Notes (2029 Notes), 1.625 % Senior Convertible Notes (2026 Notes) and 1.00 % Senior Convertible Notes (2024 Notes) would be classified in Level 2 of the fair value hierarchy as they are not actively traded in the markets.

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

December 30, 2023 July 1, 2023

The Company’s debt measured at fair value for the periods presented is as follows ( in millions ):

March 30, 2024 July 1, 2023

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

6 unchanged sentences

Total $ 588.4 $ — $ 588.4 $ — $ 700.1 $ — $ 700.1 $ —

(1) The 2024 Notes were retired upon maturity on March 1, 2024.

See “Note 11.

3 unchanged sentences

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

Network Enablement (1)

Service Enablement (1)

Network Enablement Service Enablement

Optical Security

4 unchanged sentences

— ( 1.0 ) — ( 1.0 )

Balance as of December 30, 2023 $ 400.2 $ 12.8 $ 42.2 $ 455.2

(1) Balance as of July 1, 2023 adjusted to reflect a reclass of $ 1.2 million from Service Enablement to Network Enablement due to a product line movement (see Note 19.

“Operating Segments and Geographic Information” for further details).

Balance as of March 30, 2024 $ 398.3 $ 12.7 $ 42.2 $ 453.2

(1) Adjustment related to Goodwill acquired as part of a prior acquisition.

1 unchanged sentence

In the fourth quarter of fiscal 2023, the Company performed a quantitative assessment of goodwill impairment and concluded the fair value of each of the Company’s reporting units was at least two times the carrying value, and therefore no impairment was identified.

There were no events or changes in circumstances which triggered an impairment review during the three and six months ended December 30, 2023.

There were no events or changes in circumstances which triggered an impairment review during the three and nine months ended March 30, 2024.

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 December 30, 2023 Gross Carrying Amount Accumulated Amortization Net

As of March 30, 2024 Gross Carrying Amount Accumulated Amortization Net

Acquired developed technology $ 438.0 $ ( 400.3 ) $ 37.7

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

December 30, 2023 December 31, 2022 December 30, 2023 December 31, 2022

Three Months Ended Nine Months Ended

March 30, 2024 April 1, 2023 March 30, 2024 April 1, 2023

Cost of revenues $ 3.5 $ 5.9 $ 10.4 $ 18.7

1 unchanged sentence

Total amortization of intangible assets $ 5.0 $ 8.0 $ 15.4 $ 25.2

Based on the carrying amount of acquired developed technology, customer relationships and other intangibles as of December 30, 2023, 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 March 30, 2024, and assuming no future impairment of the underlying assets, the estimated future amortization is as follows ( in millions ):

Remainder of 2024 $ 4.8

2 unchanged sentences

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

As of December 30, 2023 and July 1, 2023, the Company’s debt on the Consolidated Balance Sheets represented the carrying amount of the Senior Convertible and Senior Notes, net of unamortized debt discount and issuance costs.

As of March 30, 2024 and July 1, 2023, the Company’s debt on the Consolidated Balance Sheets represented the carrying amount of the Senior Convertible and Senior Notes, net of unamortized debt discount and issuance costs.

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

December 30, 2023 July 1, 2023

March 30, 2024 July 1, 2023

Principal amount of 1.00 % Senior Convertible Notes

$ 96.4 $ 96.4

Unamortized 1.00 % Senior Convertible Notes debt issuance cost

( 0.1 ) ( 0.2 )

Short-term debt $ — $ 96.2

9 unchanged sentences

Long-term debt $ 634.4 $ 629.5

The Company was in compliance with all debt covenants as of December 30, 2023 and July 1, 2023.

The Company was in compliance with all debt covenants as of March 30, 2024 and July 1, 2023.

VIAVI SOLUTIONS INC.

8 unchanged sentences

The proceeds of the Subscription Transactions amounted to $ 113.8 million after issuance costs of $ 4.2 million.

The exchange resulted in $ 2.2 million of the issuance costs to be recorded as Loss on convertible note modification in the Consolidated Statements of Operations.

The exchange resulted in $ 2.2 million of the issuance costs recorded as Loss on convertible note modification in the Consolidated Statements of Operations.

The remaining issuance costs of $ 2.0 million as well as $ 0.3 million of unamortized costs carried over from the 2024 Notes at the exchange date were capitalized and will be amortized to interest expense using the straight-line method until maturity.

1 unchanged sentence

The 2026 Notes mature on March 15, 2026 unless earlier converted, redeemed or repurchased.

As of December 30, 2023, the expected remaining term of the 2026 Notes is 2.2 years.

As of March 30, 2024, the expected remaining term of the 2026 Notes is 2.0 years.

3.75 % Senior Notes (2029 Notes)

4 unchanged sentences

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

As of December 30, 2023, the expected remaining term of the 2029 Notes is 5.8 years.

As of March 30, 2024, the expected remaining term of the 2029 Notes is 5.5 years.

1.75 % Senior Convertible Notes (2023 Notes)

2 unchanged sentences

In connection with the issuance of the 2023 Notes, the Company incurred $ 2.2 million of issuance costs.

The debt issuance costs were capitalized and amortized to interest expense using the straight-line method from issuance date through maturity on June 1, 2023.

The debt issuance costs were capitalized and amortized to interest expense using the straight-line method from the issuance date through maturity on June 1, 2023.

See Senior Convertible Notes Settlement section below for details of the 2023 Notes exchange transactions during fiscal 2022.

On June 1, 2023, the remaining 2023 Notes were retired upon maturity.

On June 1, 2023, the remaining 2023 Notes principal of $ 68.1 million was retired upon maturity.

VIAVI SOLUTIONS INC.

4 unchanged sentences

The total proceeds from the 2024 Notes amounted to $ 451.1 million after issuance costs of $ 8.9 million.

The debt issuance costs were capitalized and will be amortized to interest expense using the straight-line method until maturity.

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 December 30, 2023, the expected remaining term of the 2024 Notes is 0.2 years.

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

See Senior Convertible Notes Settlement section below.

During the periods from, and including December 1, 2023 until the close of business on the business day immediately preceding March 1, 2024, holders may convert the 2024 Notes at any time regardless of the foregoing circumstances.

The Company has received trivial requests for conversion.

The debt issuance costs were capitalized and amortized to interest expense using the straight-line method from the issuance date through maturity on March 1, 2024.

See Senior Convertible Notes Settlement section below for details of the 2024 Notes exchange transactions during fiscal 2022.

On March 1, 2024, the Company converted two notes at the request of the respective note-holders and retired the remaining 2024 Notes principal of $ 96.4 million upon maturity.

Senior Convertible Notes Settlement

20 unchanged sentences

Amounts outstanding under the Credit Agreement accrue interest as follows:

(i) if the amounts outstanding are denominated in US Dollars, at a per annum rate equal to either, at the Company’s election, Term Secured Overnight Financing Rate (SOFR) plus a margin of 1.35 % to 1.85 % per annum, or a specified base rate plus a margin of 0.25 % to 0.75 %, in each case, depending on the average excess availability under the facility, (ii) if the amounts outstanding are denominated in Sterling, at a per annum rate equal to the Sterling Overnight Interbank Average Rate (SONIA) plus a margin of 1.2825 % to 1.7825 %, depending on the average excess availability under the facility, (iii) if the amounts outstanding are denominated in Euros, at a per annum rate equal to the Euro Interbank Offered Rate plus a margin of 1.25 % to 1.75 %, depending on the average excess availability under the facility, or (iv) if the amounts outstanding are denominated in Canadian Dollars, at a per annum rate equal to either, at the Company’s election, the Canadian Dollar Offered Rate plus a margin of 1.25 % to 1.75 %, or a specified base rate plus a margin of 0.25 % to 0.75 %, in each case, depending on the average excess availability under the facility.

(i) if the amounts outstanding are denominated in U.S.

Dollars, at a per annum rate equal to either, at the Company’s election, Term Secured Overnight Financing Rate (SOFR) plus a margin of 1.35 % to 1.85 % per annum, or a specified base rate plus a margin of 0.25 % to 0.75 %, in each case, depending on the average excess availability under the facility, (ii) if the amounts outstanding are denominated in Sterling, at a per annum rate equal to the Sterling Overnight Interbank Average Rate (SONIA) plus a margin of 1.2825 % to 1.7825 %, depending on the average excess availability under the facility, (iii) if the amounts outstanding are denominated in Euros, at a per annum rate equal to the Euro Interbank Offered Rate plus a margin of 1.25 % to 1.75 %, depending on the average excess availability under the facility, or (iv) if the amounts outstanding are denominated in Canadian Dollars, at a per annum rate equal to either, at the Company’s election, the Canadian Dollar Offered Rate plus a margin of 1.25 % to 1.75 %, or a specified base rate plus a margin of 0.25 % to 0.75 %, in each case, depending on the average excess availability under the facility.

The covenants of the Credit Agreement include customary restrictive covenants that, among other things, restrict the Company’s ability to incur additional indebtedness, grant liens and make certain acquisitions, investments, asset dispositions and restricted payments.

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 December 30, 2023, we had no borrowings under this facility and our available borrowing capacity was approximately $ 159.0 million, net of outstanding standby letters of credit of $ 4.1 million.

As of March 30, 2024, we had no borrowings under this facility and our available borrowing capacity was approximately $ 147.5 million, net of outstanding standby letters of credit of $ 4.1 million.

Revolving Credit Facility

4 unchanged sentences

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

Three Months Ended Six Months Ended

December 30, 2023 December 31, 2022 December 30, 2023 December 31, 2022

Three Months Ended Nine Months Ended

March 30, 2024 April 1, 2023 March 30, 2024 April 1, 2023

Interest expense-contractual interest $ 4.9 $ 4.8 $ 14.9 $ 14.0

9 unchanged sentences

Lease expense and cash flow information are as follows ( in millions ):

Three Months Ended Six Months Ended

December 30, 2023 December 31, 2022 December 30, 2023 December 31, 2022

Three Months Ended Nine Months Ended

March 30, 2024 April 1, 2023 March 30, 2024 April 1, 2023

Operating lease costs (1)

2 unchanged sentences

Operating ROU assets obtained in exchange for operating lease obligations $ 3.5 $ 0.9 $ 6.1 $ 3.9

(1) Total variable lease costs were immaterial during the six months ended December 30, 2023 and December 31, 2022.

(1) Total variable lease costs were immaterial during the three and nine months ended March 30, 2024 and April 1, 2023.

The total operating costs were included in Cost of revenues, R&D, and SG&A in the Consolidated Statements of Operations.

Balance sheet information related to our operating leases is as follows ( in millions ):

December 30, 2023 July 1, 2023

March 30, 2024 July 1, 2023

Operating ROU assets (Other non-current assets) $ 37.7 $ 40.4

4 unchanged sentences

Weighted-average discount rate 5.0 % 4.8 %

Future minimum operating lease payments as of December 30, 2023 are as follows ( in millions ):

Future minimum operating lease payments as of March 30, 2024 are as follows ( in millions ):

Operating Leases

17 unchanged sentences

The Company expects approximately 5 % of its global workforce to be affected.

The first phase of the Fiscal 2023 Plan impacted our Network and Service Enablement (NSE) and Optical Security and Performance Products (OSP) segments and Corporate (Corp) functions and was substantially complete as of December 30, 2023.

The second phase of the Fiscal 2023 Plan is primarily focused on reducing costs in our Service Enablement (SE) segment and the Company anticipates this phase to be substantially complete by the end of fiscal 2024.

1 unchanged sentence

Balance as of

July 1, 2023 Restructuring and related (benefits) charges Cash Settlements Balance as of December 30, 2023

July 1, 2023 Restructuring and related (benefits) charges Cash Settlements Balance as of March 30, 2024

Fiscal 2023 Plan

5 unchanged sentences

$ 5.8 $ ( 0.8 ) $ ( 4.2 ) $ 0.8

(1) Included in Other current liabilities on the Consolidated Balance Sheets as of December 30, 2023 and July 1, 2023.

The Company recorded an income tax provision of $ 7.6 million and $ 16.2 million for the three and six months ended December 30, 2023, respectively.

The Company recorded an income tax provision of $ 10.5 million and $ 22.7 million for the three and six months ended December 31, 2022, respectively.

The income tax provision for the three and six months ended December 30, 2023 and December 31, 2022 primarily relates to income tax in certain foreign and state jurisdictions based on the Company’s forecasted pre-tax income or loss.

(1) Included in Other current liabilities on the Consolidated Balance Sheets as of March 30, 2024 and July 1, 2023.

The Company recorded an income tax provision of $ 9.0 million and $ 25.2 million for the three and nine months ended March 30, 2024, respectively.

The Company recorded an income tax provision of $ 6.0 million and $ 28.7 million for the three and nine months ended April 1, 2023, respectively.

The income tax provision for the three and nine months ended March 30, 2024 and April 1, 2023 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 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 December 30, 2023 and July 1, 2023, the Company’s unrecognized tax benefits totaled $ 50.8 million and $ 51.1 million, respectively, and are included in deferred taxes and other non-current tax liabilities, net.

The Company had $ 3.3 million accrued for the payment of interest and penalties as of December 30, 2023.

As of March 30, 2024 and July 1, 2023, the Company’s unrecognized tax benefits totaled $ 51.1 million and are included in deferred taxes and other non-current tax liabilities, net.

The Company had $ 3.4 million accrued for the payment of interest and penalties as of March 30, 2024.

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.

7 unchanged sentences

The timing of repurchases under the plan will depend upon business and financial market conditions.

During the six months ended December 30, 2023, the Company repurchased 1.0 million shares of its common stock for $ 10.0 million under the 2022 Repurchase Plan.

As of December 30, 2023, the Company had remaining authorization of $ 224.8 million for future share repurchases under the 2022 Repurchase Plan.

During the nine months ended March 30, 2024, the Company repurchased 1.0 million shares of its common stock for $ 10.0 million under the 2022 Repurchase Plan.

As of March 30, 2024, the Company had remaining authorization of $ 224.8 million for future share repurchases under the 2022 Repurchase Plan.

Stock-Based Compensation

3 unchanged sentences

The Company generally estimates the fair value of stock-based awards based on the closing market price of the Company’s common stock on the grant date.

In the case of performance-based awards that include a market condition, the Company will estimate the fair value of the award using a combination of the closing market price of the Company’s common stock on the grant date and the Monte Carlo simulation model.

In the case of performance-based awards that include a market condition, the Company estimates the fair value of the award using a combination of the closing market price of the Company’s common stock on the grant date and the Monte Carlo simulation model.

For performance-based awards, shares attained over target upon vesting are reflected as awards granted during the period.

2 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 December 30, 2023 and December 31, 2022, the Company granted 3.5 million and 2.6 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 December 30, 2023 and December 31, 2022 were estimated to be $ 34.8 million and $ 36.7 million, respectively.

During the six months ended December 30, 2023 and December 31, 2022, the Company granted 1.2 million and 0.7 million performance-based awards, respectively.

There were no performance-based shares attained over target during the six months ended December 30, 2023.

There were 0.1 million performance-based shares attained over target during the six months ended December 31, 2022.

The aggregate grant-date fair value of performance-based awards granted during the six months ended December 30, 2023 and December 31, 2022 were estimated to be $ 13.4 million and $ 11.5 million, respectively.

As of December 30, 2023, $ 80.0 million of unrecognized stock-based compensation costs remain to be amortized.

During the nine months ended March 30, 2024 and April 1, 2023, the Company granted 3.6 million and 3.1 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 March 30, 2024 and April 1, 2023 were estimated to be $ 35.1 million and $ 42.1 million, respectively.

During the nine months ended March 30, 2024 and April 1, 2023, the Company granted 1.2 million and 0.7 million performance-based awards, respectively.

There were no performance-based shares attained over target during the nine months ended March 30, 2024.

There were 0.1 million performance-based shares attained over target during the nine months ended April 1, 2023.

The aggregate grant-date fair value of performance-based awards granted during the nine months ended March 30, 2024 and April 1, 2023 were estimated to be $ 13.4 million and $ 11.5 million, respectively.

As of March 30, 2024, $ 67.3 million of unrecognized stock-based compensation costs remain to be amortized.

VIAVI SOLUTIONS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The impact on the Company’s results of operations of recording stock-based compensation by function for the three and six months ended December 30, 2023 and December 31, 2022, is as follows (in millions) :

Three Months Ended Six Months Ended

December 30, 2023 December 31, 2022 December 30, 2023 December 31, 2022

The impact on the Company’s results of operations of recording stock-based compensation by function for the three and nine months ended March 30, 2024 and April 1, 2023, is as follows (in millions) :

Three Months Ended Nine Months Ended

March 30, 2024 April 1, 2023 March 30, 2024 April 1, 2023

Cost of revenues $ 1.2 $ 1.2 $ 3.7 $ 3.6

2 unchanged sentences

Total stock-based compensation expense $ 12.8 $ 12.7 $ 36.6 $ 38.8

Approximately $ 1.3 million and $ 1.2 million of stock-based compensation was capitalized to inventory as of December 30, 2023 and December 31, 2022, respectively.

Approximately $ 1.2 million of stock-based compensation was capitalized to inventory as of March 30, 2024 and April 1, 2023.

Employee Pension and Other Benefit Plans

3 unchanged sentences

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

As of December 30, 2023, the U.K.

As of March 30, 2024, the U.K.

plan was fully 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 December 30, 2023, the Company contributed $ 0.6 million to the U.K.

During the nine months ended March 30, 2024, the Company contributed $ 0.7 million to the U.K.

plan and $ 4.6 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

December 30, 2023 December 31, 2022 December 30, 2023 December 31, 2022

Three Months Ended Nine Months Ended

March 30, 2024 April 1, 2023 March 30, 2024 April 1, 2023

Interest cost $ 0.8 $ 0.7 $ 2.5 $ 2.1

Expected return on plan assets ( 0.4 ) ( 0.4 ) ( 1.4 ) ( 1.2 )

Amortization of net actuarial gains — — ( 0.1 ) —

Amortization of net actuarial losses 0.2 — 0.1 —

Net periodic benefit cost $ 0.6 $ 0.3 $ 1.2 $ 0.9

3 unchanged sentences

Based on actuarial assumptions, the Company expects to incur cash outlays of approximately $ 8.7 million related to its defined benefit pension plans during fiscal 2024 to make current benefit payments and fund future obligations.

As of December 30, 2023, approximately $ 2.5 million had been incurred.

As of March 30, 2024, approximately $ 5.3 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 1, 2023.

9 unchanged sentences

TIC did not file a petition to appeal the decision and acknowledged its obligation to pay damages in full.

VIAVI subsequently then received total payments of $ 7.3 million from TIC and the two former employees and recorded a gain to Interest and other income, net in the Consolidated Statements of Operations for the three months ended September 30, 2023.

VIAVI subsequently received total payments of $ 7.3 million from TIC and the two former employees and recorded a gain to Interest and other income, net in the Consolidated Statements of Operations for the three months ended September 30, 2023.

Pension Settlement

15 unchanged sentences

Outstanding Letters of Credit, Performance Bonds and Other Claims

As of December 30, 2023, the Company had standby letters of credit of $ 7.1 million and performance bonds and other claims of $ 1.8 million collateralized by restricted cash.

As of March 30, 2024, the Company had standby letters of credit of $ 7.0 million and performance bonds and other claims of $ 1.9 million collateralized by restricted cash.

VIAVI SOLUTIONS INC.

1 unchanged sentence

Product Warranties

The following table presents the changes in the Company’s warranty reserve during the three and six months ended December 30, 2023 and December 31, 2022 ( in millions ):

Three Months Ended Six Months Ended

December 30, 2023 December 31, 2022 December 30, 2023 December 31, 2022

The following table presents the changes in the Company’s warranty reserve during the three and nine months ended March 30, 2024 and April 1, 2023 ( in millions ):

Three Months Ended Nine Months Ended

March 30, 2024 April 1, 2023 March 30, 2024 April 1, 2023

Balance as of beginning of period $ 8.5 $ 9.4 $ 9.0 $ 10.6

28 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 December 30, 2023 and December 31, 2022 ( in millions ):

Three Months Ended December 30, 2023

The following tables present information on the Company’s reportable segments for the three months ended March 30, 2024 and April 1, 2023 ( in millions ):

Three Months Ended March 30, 2024

Network and Service Enablement

6 unchanged sentences

Gross margin 61.5 % 60.8 % 61.4 % 50.1 % 56.1 %

Operating income $ 6.4 $ 27.3 $ ( 11.3 ) $ 22.4

Operating (loss) income $ ( 3.1 ) $ 26.1 $ ( 34.9 ) $ ( 11.9 )

Operating margin ( 1.8 ) % 34.3 % ( 4.8 ) %

Three Months Ended December 31, 2022

Three Months Ended April 1, 2023

Network and Service Enablement

Network Enablement (2)

Service Enablement (2)

Network and Service Enablement Optical Security and Performance Products Other Items (1)

Network Enablement Service Enablement Network and Service Enablement Optical Security and Performance Products Other Items (1)

Consolidated GAAP Measures

6 unchanged sentences

Gross margin 62.2 % 70.1 % 63.3 % 50.6 % 56.9 %

Operating income $ 18.5 $ 27.5 $ ( 23.1 ) $ 22.9

Operating income (loss) $ 2.5 $ 25.8 $ ( 30.4 ) $ ( 2.1 )

Operating margin 1.4 % 36.6 % ( 0.8 ) %

(1) Other Items include charges (benefits) unrelated to core operating performance primarily consisting of stock-based compensation, amortization of acquisition-related intangibles, restructuring, changes in fair value of contingent consideration liabilities and other charges unrelated to core operating performance.

(2) Effective for the first quarter of fiscal 2024, management of certain products moved from the SE segment to the NE segment to better align with operational and go-to-market strategies.

As a result, prior period balances have been recast to reflect the impact to net revenue, gross profit and gross margin.

During the three months ended March 30, 2024, Other Items include expenses related to the proposed acquisition of Spirent Communications plc (Spirent).

VIAVI SOLUTIONS INC.

1 unchanged sentence

Three Months Ended

December 30, 2023 December 31, 2022

March 30, 2024 April 1, 2023

Corporate reconciling items impacting gross profit:

2 unchanged sentences

Amortization of intangibles ( 3.5 ) ( 5.9 )

Other charges unrelated to core operating performance (1)

Other benefits unrelated to core operating performance (1)

GAAP gross profit $ 137.9 $ 141.0

6 unchanged sentences

( 16.4 ) ( 1.4 )

Restructuring and related benefits 0.1 —

GAAP operating income from continuing operations $ 22.4 $ 22.9

(1) During the three months ended December 30, 2023 and December 31, 2022, other charges unrelated to core operating performance primarily consisting of certain acquisition and integration related charges, accretion of debt discount and loss on disposal of long-lived assets.

Restructuring and related charges ( 0.1 ) ( 10.2 )

GAAP operating loss from continuing operations $ ( 11.9 ) $ ( 2.1 )

(1) During the three months ended March 30, 2024 and April 1, 2023, Other benefits (charges) unrelated to core operating performance primarily consisting of certain acquisition and integration related charges, accretion of debt discount and loss on disposal of long-lived assets.

During the three months ended March 30, 2024, Other charges include expenses related to the proposed acquisition of Spirent.

VIAVI SOLUTIONS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Six Months Ended December 30, 2023

Nine Months Ended March 30, 2024

Network and Service Enablement

8 unchanged sentences

Operating margin 0.9 % 36.2 % 3.5 %

Six Months Ended December 31, 2022

Nine Months Ended April 1, 2023

Network and Service Enablement

Network Enablement (2)

Service Enablement (2)

Network and Service Enablement Optical Security and Performance Products Other Items (1)

Network Enablement Service Enablement Network and Service Enablement Optical Security and Performance Products Other Items (1)

Consolidated GAAP Measures

Product revenue $ 441.7 $ 33.6 $ 475.3 $ 239.1 $ — $ 714.4

$ 318.9 $ 21.7 $ 340.6 $ 168.6 $ — $ 509.2

Service revenue

6 unchanged sentences

(2) Effective for the first quarter of fiscal 2024, management of certain products moved from the SE segment to the NE segment to better align with operational and go-to-market strategies.

As a result, prior period balances have been recast to reflect the impact to net revenue, gross profit and gross margin.

During the nine months ended March 30, 2024, Other Items include expenses related to the proposed acquisition of Spirent.

VIAVI SOLUTIONS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Six Months Ended

December 30, 2023 December 31, 2022

Nine Months Ended

March 30, 2024 April 1, 2023

Corporate reconciling items impacting gross profit:

2 unchanged sentences

Amortization of intangibles ( 10.4 ) ( 18.7 )

Other charges unrelated to core operating performance (1)

( 0.1 ) ( 0.3 )

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

GAAP gross profit $ 430.3 $ 492.8

5 unchanged sentences

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

Restructuring and related benefits 0.9 —

Restructuring and related benefits (charges) 0.8 ( 10.2 )

GAAP operating income from continuing operations $ 26.5 $ 70.6

(1) During the six months ended December 30, 2023 and December 31, 2022, other (charges) benefits unrelated to core operating performance primarily consisting of certain acquisition and integration related charges, legal settlement, accretion of debt discount and losses on disposal of long-lived assets.

(1) During the nine months ended March 30, 2024 and April 1, 2023, Other benefits (charges) unrelated to core operating performance primarily consisting of certain acquisition and integration related charges, accretion of debt discount and loss on disposal of long-lived assets.

During the nine months ended March 30, 2024, Other charges include expenses related to the proposed acquisition of Spirent.

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 December 30, 2023 and December 31, 2022 (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 March 30, 2024 and April 1, 2023 (in millions):

Three Months Ended

December 30, 2023 December 31, 2022

March 30, 2024 April 1, 2023

Product Revenue Service Revenue Total Product Revenue Service Revenue Total

8 unchanged sentences

Total net revenue $ 207.3 $ 38.7 $ 246.0 $ 205.2 $ 42.6 $ 247.8

Six Months Ended

December 30, 2023 December 31, 2022

Nine Months Ended

March 30, 2024 April 1, 2023

Product Revenue Service Revenue Total Product Revenue Service Revenue Total

8 unchanged sentences

Total net revenue $ 623.8 $ 124.6 $ 748.4 $ 714.4 $ 128.1 $ 842.5

VIAVI SOLUTIONS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Subsequent Events

On January 11, 2024, VIAVI announced that the U.S.

National Telecommunications and Information Administration has awarded the Company a grant from the Public Wireless Supply Chain Innovation Fund.

The grant is expected to provide approximately $ 21.7 million in funding over a three-year period to be used by the Company to create an advanced test lab to enable and accelerate the development of Open Radio Access Network technology and components.

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