What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2025-08-11 compared with 2024-08-16 · 519 added, 438 removed, 1266 unchanged (43% of the section changed)

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We have audited the accompanying consolidated balance sheets of Viavi Solutions Inc.

and its subsidiaries (the “Company”) as of June 29, 2024 and July 1, 2023, and the related consolidated statements of operations, of comprehensive (loss) income, of stockholders’ equity, and of cash flows, for each of the three years in the period ended June 29, 2024, including the related notes (collectively referred to as the “consolidated financial statements”).

and its subsidiaries (the "Company") as of June 28, 2025 and June 29, 2024, and the related consolidated statements of operations, of comprehensive income (loss), of stockholders’ equity and of cash flows for each of the three years in the period ended June 28, 2025, including the related notes (collectively referred to as the "consolidated financial statements").

We also have audited the Company's internal control over financial reporting as of June 28, 2025, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of June 29, 2024 and July 1, 2023, and the results of its operations and its cash flows for each of the three years in the period ended June 29, 2024 in conformity with accounting principles generally accepted in the United States of America.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of June 28, 2025 and June 29, 2024, and the results of its operations and its cash flows for each of the three years in the period ended June 28, 2025 in conformity with accounting principles generally accepted in the United States of America.

Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of June 28, 2025, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

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We believe that our audits provide a reasonable basis for our opinions.

As described in Management’s Report on Internal Control over Financial Reporting, management has excluded Inertial Labs, Inc.

(“Inertial Labs”) from its assessment of internal control over financial reporting as of June 28, 2025 because it was acquired by the Company in a purchase business combination during 2025.

We have also excluded Inertial Labs from our audit of internal control over financial reporting.

Inertial Labs is a wholly-owned subsidiary whose total assets and total revenues excluded from management’s assessment and our audit of internal control over financial reporting represent 2.1% and 2.3%, respectively, of the related consolidated financial statement amounts as of and for the year ended June 28, 2025.

Definition and Limitations of Internal Control over Financial Reporting

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Critical Audit Matters

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Revenue Recognition - Network Enablement and Service Enablement Reportable Segments

As described in Notes 1 and 19 to the consolidated financial statements, the Company had $1,000.4 million of total net revenue for the year ended June 29, 2024, of which $615.7 million and $86.3 million related to the Network Enablement and the Service Enablement reportable segments, respectively.

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that (i) relate to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Revenue Recognition - Network and Service Enablement Reportable Segment

As described in Notes 1 and 19 to the consolidated financial statements, the Company had $1,084.3 million of total net revenue for the year ended June 28, 2025, of which $776.6 million related to the Network and Service Enablement reportable segment.

Revenue is recognized at the point in time control is transferred to the customer.

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For sales of implementation service and solution contracts or in instances where software is sold along with essential installation services, transfer of control occurs and revenue is typically recognized upon customer acceptance.

The principal consideration for our determination that performing procedures relating to revenue recognition for the Network Enablement and the Service Enablement reportable segments is a critical audit matter is a high degree of auditor effort in performing procedures related to the Company’s revenue recognition.

The principal consideration for our determination that performing procedures relating to revenue recognition for the Network and Service Enablement reportable segment is a critical audit matter is a high degree of auditor effort in performing procedures related to the Company’s revenue recognition.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures included testing the effectiveness of controls relating to the revenue recognition process, including controls over the recognition of revenue for the Network Enablement and the Service Enablement reportable segments.

These procedures also included, among others, for the Network Enablement and the Service Enablement reportable segments (i) testing the revenue recognized, on a sample basis, by obtaining and inspecting source documents, such as contracts, invoices, evidence of transfer of control and cash receipts, and recalculating revenue recognized;

(ii) confirming outstanding customer invoice balances as of June 29, 2024, on a sample basis, and for confirmations not returned, obtaining and inspecting source documents, such as contracts, invoices, evidence of transfer of control, subsequent cash receipts, and other source documents to support collectability of outstanding customer invoice balances;

These procedures also included, among others, for the Network and Service Enablement reportable segment (i) testing the revenue recognized, on a sample basis, by obtaining and inspecting source documents, such as contracts, invoices, evidence of transfer of control, and payment receipts, and recalculating revenue recognized;

(ii) confirming outstanding customer invoice balances as of June 28, 2025, on a sample basis, and, for confirmations not returned, obtaining and inspecting source documents, such as contracts, invoices, evidence of transfer of control, subsequent payment receipts, and other source documents to support collectability of outstanding customer invoice balances;

(iii) testing the issuance of credit memos, on a sample basis, by obtaining and inspecting source documents, such as credit memos, original invoices, and re-issued invoices;

and (iv) testing the timing of revenue recognition, on a sample basis, for revenue transactions that occurred near period end by obtaining and inspecting source documents, such as invoices, evidence of transfer of control, and cash receipts.

Acquisition of Inertial Labs – Valuation of Contingent Consideration and Developed Technology Acquired

As described in Notes 1 and 5 to the consolidated financial statements, on January 28, 2025, the Company completed the acquisition of Inertial Labs for total purchase consideration of $270.6 million.

The total purchase consideration included contingent consideration of up to $175.0 million, payable upon the achievement of certain revenue targets.

As of the acquisition date, the fair value of the contingent consideration was $116.2 million.

The fair value of the contingent consideration is determined using a Monte Carlo model that includes significant unobservable inputs such as the projected revenues of the acquired business over the earn-out period.

Of the acquired intangible assets, $102.0 million related to developed technology.

Management valued the developed technology acquired using the multi-period excess earnings method under the income approach.

Significant assumptions used in the discounted cash flow analysis include projected revenues, discount rate, and technology obsolescence rate.

The principal considerations for our determination that performing procedures relating to the valuation of contingent consideration and developed technology in the acquisition of Inertial Labs is a critical audit matter are (i) the significant judgment by management when developing the fair value estimate of the contingent consideration and developed technology acquired;

(ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s significant assumptions related to (a) projected revenues for the contingent consideration and (b) projected revenues, discount rate, and technology obsolescence rate for the developed technology acquired;

and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures included testing the effectiveness of controls relating to the acquisition accounting, including controls over management’s valuation of the contingent consideration and developed technology acquired.

These procedures also included, among others (i) reading the purchase agreement;

(ii) testing management’s process for developing the fair value estimate of the contingent consideration and developed technology acquired;

(iii) evaluating the appropriateness of the Monte Carlo model and multi-period excess earnings method used by management;

(iv) testing the completeness and accuracy of the underlying data used in the Monte Carlo model and multi-period excess earnings method;

and (v) evaluating the reasonableness of the significant assumptions used by management related to (a) projected revenues for the contingent consideration and (b) projected revenues, discount rate, and technology obsolescence rate for the developed technology acquired.

Evaluating management’s assumptions related to the projected revenues for the contingent consideration and developed technology acquired involved considering (i) the current and past performance of the Inertial Labs business;

(ii) the consistency with external market and industry data;

and (iii) whether the assumptions were consistent with evidence obtained in other areas of the audit.

Professionals with specialized skill and knowledge were used to assist in evaluating (i) the appropriateness of the Monte Carlo model and multi-period excess earnings method and (ii) the reasonableness of the discount rate and technology obsolescence rate assumptions for the developed technology acquired.

/s/ PricewaterhouseCoopers LLP

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(in millions, except per share data)

June 29, 2024 July 1, 2023 July 2, 2022

June 28, 2025 June 29, 2024 July 1, 2023

Product revenue $ 912.0 $ 834.8 $ 936.1

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Amortization of other intangibles 4.8 6.3 8.7

Restructuring and related charges (benefits) 13.6 12.1 ( 0.1 )

Restructuring and related charges 0.7 13.6 12.1

Total operating expenses 563.6 555.1 556.4

Income from operations 57.5 20.8 82.4

Loss on convertible note settlement (Note 11) — — ( 101.8 )

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

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Interest expense ( 30.0 ) ( 30.9 ) ( 27.1 )

Income before income taxes 11.6 60.7 65.1

Income before income taxes and equity investment earnings 38.6 11.6 60.7

Provision for income taxes 4.4 37.4 35.2

Net (loss) income $ ( 25.8 ) $ 25.5 $ 15.5

Net (loss) income per share:

Equity investment earnings 0.6 — —

Net income (loss) $ 34.8 $ ( 25.8 ) $ 25.5

Net income (loss) per share:

Basic $ 0.16 $ ( 0.12 ) $ 0.11

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VIAVI SOLUTIONS INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(in millions)

June 29, 2024 July 1, 2023 July 2, 2022

Net (loss) income $ ( 25.8 ) $ 25.5 $ 15.5

Other comprehensive (loss) income:

June 28, 2025 June 29, 2024 July 1, 2023

Net income (loss) $ 34.8 $ ( 25.8 ) $ 25.5

Other comprehensive income (loss):

Net change in cumulative translation adjustment, net of tax 33.9 ( 6.0 ) 18.8

Net change in available-for-sale investments, net of tax:

Unrealized holding (losses) gains arising during period — ( 0.3 ) 0.1

Unrealized holding losses arising during period — — ( 0.3 )

Net change in defined benefit obligation, net of tax:

Unrealized actuarial (loss) gains arising during period ( 2.1 ) 2.0 13.9

Unrealized actuarial gains (losses) arising during period 0.1 ( 2.1 ) 2.0

Amortization of actuarial losses (gains) 0.2 0.1 ( 0.1 )

Net change in accumulated other comprehensive (loss) income ( 8.0 ) 20.4 ( 59.2 )

Comprehensive (loss) income $ ( 33.8 ) $ 45.9 $ ( 43.7 )

Net change in accumulated other comprehensive income (loss) 34.2 ( 8.0 ) 20.4

Comprehensive income (loss) $ 69.0 $ ( 33.8 ) $ 45.9

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

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(in millions, except share and par value data)

June 29, 2024 July 1, 2023

June 28, 2025 June 29, 2024

Current assets:

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Other non-current liabilities 227.6 171.6

Total liabilities 1,213.6 1,054.7

Commitments and contingencies (Note 18)

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Preferred stock, $ 0.001 par value;

1 million shares authorized, no shares issued or outstanding at June 29, 2024 and July 1, 2023.

1 million shares authorized, no shares issued or outstanding at June 28, 2025 and June 29, 2024

Common stock, $ 0.001 par value;

1 billion shares authorized;

222 million shares at June 29, 2024 and July 1, 2023, issued and outstanding

223 million shares at June 28, 2025 and 222 million shares at June 29, 2024, issued and outstanding

Additional paid-in capital 70,517.9 70,471.9

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(in millions)

June 29, 2024 July 1, 2023 July 2, 2022

June 28, 2025 June 29, 2024 July 1, 2023

OPERATING ACTIVITIES:

Net (loss) income $ ( 25.8 ) $ 25.5 $ 15.5

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

Net income (loss) $ 34.8 $ ( 25.8 ) $ 25.5

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

Depreciation expense 38.4 38.6 36.2

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Net change in fair value of contingent liabilities ( 8.3 ) ( 9.5 ) ( 4.6 )

Loss on convertible note debt modification and settlement — 2.2 101.8

Loss on convertible note debt modification — — 2.2

Deferred taxes, net ( 28.4 ) 0.3 4.8

Amortization of acquisition related inventory step-up 4.3 — —

Restructuring 0.7 13.6 12.1

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Proceeds from the sale of assets 5.1 3.4 5.1

Other investing activities ( 3.0 ) — —

Net cash used in investing activities ( 128.4 ) ( 21.6 ) ( 127.1 )

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Retirement of convertible notes upon maturity — ( 96.4 ) ( 68.1 )

Cash paid in convertible note settlement — — ( 351.6 )

Proceeds from exercise of employee stock options and employee stock purchase plan 6.0 6.3 7.9

Withholding tax payment on vesting of restricted stock awards ( 13.2 ) ( 11.1 ) ( 11.8 )

Proceeds from revolving credit facility — — 150.0

Repayment of revolving credit facility — — ( 150.0 )

Payment of acquisition related contingent consideration and obligations — ( 4.3 ) ( 7.8 )

Other financing activities 0.2 — —

Net cash used in financing activities ( 23.6 ) ( 125.7 ) ( 50.0 )

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Cash paid for income taxes, net of refunds $ 29.5 $ 30.9 $ 47.5

(1) These amounts include both current and non-current balances of restricted cash totaling $ 9.1 million, $ 12.9 million and $ 10.6 million as of July 1, 2023, July 2, 2022, and July 3, 2021, respectively.

(1) These amounts include both current and non-current balances of restricted cash totaling $ 10.5 million, $ 9.1 million and $ 12.9 million as of June 29, 2024, July 1, 2023, and July 2, 2022, respectively.

(2) These amounts include both current and non-current balances of restricted cash totaling $ 8.5 million, $ 10.5 million and $ 9.1 million as of June 28, 2025, June 29, 2024 and July 1, 2023, respectively.

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

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Net income — — — 25.5 — 25.5

Other comprehensive loss — — — — ( 59.2 ) ( 59.2 )

Shares issued under employee stock plans, net of tax effects 2.3 — ( 6.1 ) — — ( 6.1 )

Stock-based compensation — — 52.0 — — 52.0

Repurchase of common stock ( 14.8 ) — — ( 235.5 ) — ( 235.5 )

Convertible note settlement (Note 11)

10.6 — 141.1 — — 141.1

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

Net income — — — 25.5 — 25.5

Other comprehensive income — — — — 20.4 20.4

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Balance at June 29, 2024 221.9 $ 0.2 $ 70,471.9 $ ( 69,646.5 ) $ ( 144.0 ) $ 681.6

Net income — — — 34.8 — 34.8

Other comprehensive income — — — — 34.2 34.2

Shares issued under employee stock plans, net of tax effects 3.3 — ( 7.2 ) — — ( 7.2 )

Stock-based compensation — — 52.9 — — 52.9

Repurchase of common stock ( 2.0 ) — 0.3 ( 16.4 ) — ( 16.1 )

Balance at June 28, 2025 223.2 $ 0.2 $ 70,517.9 $ ( 69,628.1 ) $ ( 109.8 ) $ 780.2

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

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Viavi Solutions, Inc.

(VIAVI, also referred to as the Company, we, our and us), is a global provider of network test, monitoring and assurance solutions for telecommunications, cloud, enterprises, first responders, military, aerospace and railway.

VIAVI is also a leader in light management technologies which are used in anti-counterfeiting, 3D sensing, consumer electronics, industrial, automotive, government and aerospace applications.

VIAVI is also a leader in optical processing technologies for anti-counterfeiting, 3D sensing, aerospace, automotive and industrial applications.

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

The Company’s 2024, 2023 and 2022 fiscal years were 52-week years ending on June 29, 2024, July 1, 2023, and July 2, 2022, respectively.

The Company’s 2025, 2024 and 2023 fiscal years were 52-week years ending on June 28, 2025, June 29, 2024, and July 1, 2023, respectively.

Principles of Consolidation

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All inter-company accounts and transactions have been eliminated.

Reclassification of Prior Period Balances

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

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 NE and SE goodwill balances as of July 2, 2022 in “Note 9.

Goodwill” and operating segment tables for the years ended July 1, 2023 and July 2, 2022 in “Note 19.

Operating Segments and Geographic Information.”

Use of Estimates

The preparation of the Company’s 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 effect the reported amount of assets and liabilities at the date of the financial statements, the reported amount of net revenue and expenses 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.

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Restricted Cash

At June 29, 2024 and July 1, 2023, the Company’s short-term restricted cash balances were $ 5.0 million and $ 4.5 million, respectively.

The Company’s long-term restricted cash balances, included in Other non-current assets on the Consolidated Balance Sheets, were $ 5.5 million and $ 4.6 million as of June 29, 2024 and July 1, 2023, respectively.

At June 28, 2025 and June 29, 2024, the Company’s short-term restricted cash balances were $ 3.7 million and $ 5.0 million, respectively.

The Company’s long-term restricted cash balances, included in Other non-current assets on the Consolidated Balance Sheets, were $ 4.9 million and $ 5.5 million as of June 28, 2025 and June 29, 2024, respectively.

These balances primarily include interest-bearing investments in bank deposit and money market funds which act as collateral supporting the issuance of standby letters of credit and performance bonds for the benefit of third parties.

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Commitments and Contingencies” for more information.

The Company’s investments in debt securities are classified as available for sale investments, recorded at fair value.

The cost of securities sold is based on the specific identified method.

Unrealized gains and losses resulting from changes in fair value on available-for-sale investments, net of tax, are reported as a component of Accumulated other comprehensive loss on the Consolidated Balance Sheets.

VIAVI SOLUTIONS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The Company’s investments in debt securities are classified as available for sale investments, recorded at fair value.

The cost of securities sold is based on the specific identification method.

The Company periodically reviews investments in debt securities for impairment.

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The Company’s investments also include fixed term deposits with interest earned recorded as a component of Interest and other income, net, in the Consolidated Statements of Operations.

Equity Investments

The Company accounts for investments in entities for which it does not have a controlling financial interest or majority voting interest but has a significant influence over operating and financial policies, if any, under the equity method of accounting.

Earnings and losses from such investments are recorded as Equity investment earnings in the Consolidated Statements of Operations.

Fair Value of Financial Instruments

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The significant inputs for the valuation model usually include benchmark yields, reported trades, broker and dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers and reference data, and industry and economic events.

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 June 29, 2024 and July 1, 2023, the Company did not hold any Level 3 investment securities.

The Company’s Level 3 liabilities as of June 29, 2024 and July 1, 2023 consist of contingent purchase consideration liabilities related to business acquisitions.

The fair value of such earn-out liabilities are generally determined using a Monte Carlo Simulation that includes significant unobservable inputs such as the risk-adjusted discount rate, gross profit volatility, and projected financial forecast of acquired business over the earn-out period.

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 in the Consolidated Statements of Operations.

VIAVI SOLUTIONS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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 June 28, 2025, the Company’s Level 3 assets consist of an investment in a non-marketable equity security in a privately held company.

We measure the non-marketable equity security under the Measurement Alternative at cost minus impairment, if any, adjusted for observable price changes in orderly transactions for an identical or similar investment in the same issuer.

As of June 29, 2024, the Company did not hold any Level 3 investment securities.

The Company’s Level 3 liabilities as of June 28, 2025 and June 29, 2024 consist of contingent purchase consideration liabilities related to business acquisitions.

The fair value of such earn-out liabilities are generally determined using a Monte Carlo Simulation that includes significant unobservable inputs such as the projected revenues of the acquired business over the earn-out period.

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

The Company’s inventory is valued at standard cost, which approximates actual cost computed on a first-in, first-out basis, not in excess of net realizable value.

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The Company does not recognize ROU assets and lease liabilities for leases with a lease term of twelve months or less.

VIAVI SOLUTIONS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Property, Plant and Equipment

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Costs capitalized for computer software developed or obtained for internal use are included in Property, plant and equipment, net, on the Consolidated Balance Sheets.

VIAVI SOLUTIONS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Business Combinations

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Additionally, any contingent consideration is recorded at fair value on the acquisition date and classified as a liability.

Contingent consideration amounts expected to be paid within one year of the balance sheet date are included in Other current liabilities on the Consolidated Balance Sheets.

Contingent consideration amounts expected to be paid more than one year after the balance sheet date are included in Other non-current liabilities on the Consolidated Balance Sheets.

The Company determines the estimated fair values after review and consideration of relevant information, including discounted cash flows, quoted market prices and estimates made by management.

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Acquisition related costs are recognized separately from the business combination and are expensed as incurred.

VIAVI SOLUTIONS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Goodwill represents the excess of the purchase price paid over the net fair value of assets acquired and liabilities assumed.

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Goodwill” for more information.

VIAVI SOLUTIONS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Intangible Assets

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Estimates of future cash flow require significant judgment based on anticipated future operating results, which are subject to variability and change.

VIAVI SOLUTIONS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Pension and Other Post-retirement Benefits

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Those gains or losses and prior service cost or credit are subsequently recognized as a component of net periodic pension cost pursuant to the recognition and amortization provisions of the authoritative guidance.

VIAVI SOLUTIONS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The measurement of the benefit obligation and net periodic pension cost is based on the Company’s estimates and actuarial valuations provided by third-party actuaries and are approved by management.

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The Company measures its benefit obligation and plan assets using the month-end date of June 30, which is closest to the Company’s fiscal year-end.

VIAVI SOLUTIONS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Concentration of Credit and Other Risks

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Potential risk of loss with any one counterparty resulting from such risk is monitored by the Company on an ongoing basis.

The Company maintains an allowance for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments.

The Company maintains an allowance for credit losses for estimated losses resulting from the inability of its customers to make required payments.

When the Company becomes aware that a specific customer is unable to meet its financial obligations, the Company records a specific allowance to reflect the level of credit risk in the customer’s outstanding receivable balance.

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The Company has significant trade receivables concentrated in the telecommunications industry.

While the Company’s allowance for doubtful accounts balance is based on historical loss experience along with anticipated economic trends, unanticipated financial instability in the telecommunications industry could lead to higher than anticipated losses.

As of June 29, 2024 and July 1, 2023, there were no customer balances that represented 10% or more of the Company’s total accounts receivable, net.

While the Company’s allowance for credit losses balance is based on historical loss experience along with anticipated economic trends, unanticipated financial instability in the telecommunications industry could lead to higher than anticipated losses.

As of June 28, 2025 and June 29, 2024, there were no customer balances that represented 10% or more of the Company’s total accounts receivable, net.

During fiscal 2025, 2024 and 2023, one customer generated 10% or more of total net revenues.

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The Company relies on a limited number of suppliers and contract manufacturers for a number of key components and sub-assemblies contained in the Company’s products.

VIAVI SOLUTIONS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The Company generally uses a rolling twelve-month forecast based on anticipated product orders, customer forecasts, product order history and backlog to determine its materials requirements for any one period.

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The Company could experience reduced or delayed product shipments or incur additional inventory write-downs and cancellation charges or penalties, which may result in increased costs and have a material adverse impact on the Company’s results of operations.

VIAVI SOLUTIONS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Foreign Currency Forward Contracts

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The Company derives revenue from a diverse portfolio of network solutions and optical technology products and services, as follows:

Network Enablement (NE) and Service Enablement (SE) products include instruments, microprobes and perpetual software licenses that support the development, production, maintenance and optimization of network systems.

NE and SE are collectively referred to as Network and Service Enablement (NSE).

Network and Service Enablement (NSE) products include instruments, microprobes and perpetual software licenses that support the development, production, maintenance and optimization of network systems.

The Company’s Optical Security and Performance (OSP) products include proprietary pigments used for optical security and optical filters used in commercial, government and 3D sensing applications.

The Company also offers a range of product support and professional services, primarily in the NE and SE segments, designed to comprehensively address customer requirements.

The Company also offers a range of product support and professional services, primarily in the NSE segment, designed to comprehensively address customer requirements.

These include repair, calibration, extended warranty, software support, technical assistance, training and consulting services.

Implementation services provided in conjunction with hardware or software solution projects include sale of the products along with project management, set-up and installation.

VIAVI SOLUTIONS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Steps of revenue recognition

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The Company utilizes judgment to determine the customer’s ability and intent to pay, which is based upon various factors including the customer’s historical payment experience or credit and financial information and credit risk management measures implemented by the Company.

VIAVI SOLUTIONS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Identify the performance obligations in the contract:

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If a directly observable price is not available, the SSP must be estimated based on multiple factors including, but not limited to, historical pricing practices, internal costs and profit objectives, as well as overall market conditions.

VIAVI SOLUTIONS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Recognize revenue when (or as) performance obligations are satisfied:

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For other professional services or time-based labor contracts, revenue is recognized as the Company performs the services and the customers receive and/or consume the benefits.

VIAVI SOLUTIONS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Revenue policy and practical expedients

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In addition, from time to time, specific warranty accruals may be made if unforeseen technical problems arise.

VIAVI SOLUTIONS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Shipping and Handling Costs

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Research and Development Expense

Costs related to research and development (R&D) primarily consists of labor and benefits, supplies, facilities, consulting and outside service fees.

Costs related to research and development (R&D) primarily consist of labor and benefits, supplies, facilities, consulting and outside service fees.

The authoritative guidance allows for capitalization of software development costs incurred after a product’s technological feasibility has been established until the product is available for general release to the public.

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As such, software development costs have been expensed as incurred.

VIAVI SOLUTIONS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Government Assistance

54 unchanged sentences

Subsequent to initial recognition, the Company records period-to-period changes in the ARO liability resulting from the passage of time and revisions to either the timing or the amount of the original estimate of undiscounted cash flows.

Recently Issued Accounting Pronouncements

SEC Climate Rules

In March 2024, the SEC issued its final climate disclosure rules, which require the disclosure of climate-related information in annual reports and registration statements.

The rules require disclosure in the audited financial statements of certain effects of severe weather events and other natural conditions above certain financial thresholds, as well as amounts related to carbon offsets and renewable energy credits or certificates, if material.

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 and continue to monitor the status of the related legal challenges.

VIAVI SOLUTIONS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Accounting Standards Issued But Not Yet Adopted

Recently Issued Accounting Pronouncements

Recent Accounting Pronouncements Adopted

In November 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standard Update (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 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 2025 for the Company.

The Company adopted this guidance in the fourth quarter of fiscal 2025.

See “Note 19.

Operating Segments and Geographic Information” for the segment disclosure applying the guidance of ASU 2023-07, including retrospective application to all periods presented.

In November 2024, the FASB issued ASU 2024-04, Debt-Debt with Conversion and Other Options (Subtopic 470-20):

Induced Conversions of Convertible Debt Instruments , which clarifies the requirements for determining whether certain settlements of convertible debt instruments should be accounted for as an induced conversion or extinguishment of convertible debt.

This guidance is effective for fiscal years beginning after December 15, 2025 (fiscal 2027 for the Company), and interim periods within those annual reporting periods, with early and retrospective adoption permitted.

The Company adopted this guidance in the fourth quarter of fiscal 2025 on a prospective basis, which did not have an impact on the Company’s Consolidated Financial Statements.

We will assess future impact, if any, in subsequent periods.

Accounting Pronouncements Issued But Not Yet Adopted

In November 2024, the FASB issued ASU 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses , which requires disaggregated disclosure of income statement expenses for public business entities.

The objective of this guidance is to improve the disclosures about a public business entity’s expenses and address requests from investors for more detailed information about the types of expenses (including purchases of inventory, employee compensation, depreciation, amortization and depletion) in commonly presented expense captions such as Cost of revenues, R&D and SG&A.

This guidance is effective for fiscal years beginning after December 15, 2026 (fiscal 2028 for the Company), and interim periods within fiscal years beginning after December 15, 2027, with early and retrospective adoption permitted.

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

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.

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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 .

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The amendments in this ASU will be effective on the date the related disclosures are removed from Regulation S-X or Regulation S-K by the SEC, and will not be effective if the SEC has not removed the applicable disclosure requirement by June 30, 2027.

Early adoption is prohibited.

This ASU is not expected to have a material impact on our Consolidated Financial Statements or related disclosures.

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Earnings Per Share

Basic net (loss) income per share is computed by dividing net (loss) income for the period by the weighted average number of common shares outstanding during the period.

Diluted net (loss) income per share is computed by dividing net (loss) income for the period by the weighted average number of shares of common stock and potentially dilutive common stock outstanding during the period.

If dilutive, the effect of outstanding Employee Stock Purchase Program (ESPP) purchase rights, restricted stock units (RSUs), performance-based stock units (PSUs), market-based stock units (MSUs), stock options and Senior Convertible Notes is reflected in diluted net (loss) income per share by application of the treasury stock method and/or the if-converted method, as applicable.

The calculation of diluted net (loss) income per share excludes all anti-dilutive common shares.

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

June 29, 2024 July 1, 2023 July 2, 2022

Net (loss) income $ ( 25.8 ) $ 25.5 $ 15.5

Basic net income (loss) per share is computed by dividing net income (loss) for the period by the weighted average number of common shares outstanding during the period.

Diluted net income (loss) per share is computed by dividing net income (loss) for the period by the weighted average number of shares of common stock and potentially dilutive common stock outstanding during the period.

If dilutive, the effect of outstanding ESPP purchase rights, restricted stock units (RSUs), performance-based stock units (PSUs), market-based stock units (MSUs), stock options and Senior Convertible Notes is reflected in diluted net income (loss) per share by application of the treasury stock method and/or the if-converted method, as applicable.

The calculation of diluted net income (loss) per share excludes all anti-dilutive common shares.

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

June 28, 2025 June 29, 2024 July 1, 2023

Net income (loss) $ 34.8 $ ( 25.8 ) $ 25.5

Weighted-average shares outstanding:

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Diluted 225.7 222.6 226.6

Net (loss) income per share:

Net income (loss) per share:

Basic $ 0.16 $ ( 0.12 ) $ 0.11

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Debt” for more information.

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 ):

June 29, 2024 July 1, 2023 July 2, 2022

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

June 28, 2025 June 29, 2024 July 1, 2023

Full Value Awards (1)

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obligations, net of tax (1)

Beginning balance as of July 1, 2023 $ ( 5.3 ) $ ( 125.4 ) $ ( 5.3 ) $ ( 136.0 )

Other comprehensive loss before reclassification — ( 6.0 ) ( 2.1 ) ( 8.1 )

Beginning balance as of June 29, 2024 $ ( 5.3 ) $ ( 131.4 ) $ ( 7.3 ) $ ( 144.0 )

Other comprehensive income before reclassification — 33.9 0.1 34.0

Amounts reclassified from accumulated other comprehensive loss — — 0.2 0.2

Net current period other comprehensive loss — ( 6.0 ) ( 2.0 ) ( 8.0 )

Net current period other comprehensive income — 33.9 0.3 34.2

Ending balance as of June 28, 2025 $ ( 5.3 ) $ ( 97.5 ) $ ( 7.0 ) $ ( 109.8 )

(1) Activity before reclassifications to the Consolidated Statements of Operations during the fiscal year ended June 29, 2024 relates to the unrealized actuarial loss of $ 2.8 million, net of income tax effect of $ 0.7 million.

(1) Activity before reclassifications to the Consolidated Statements of Operations during the fiscal year ended June 28, 2025 relates to the unrealized actuarial gain of $ 0.2 million, net of income tax effect of $ 0.1 million.

The amount reclassified out of accumulated other comprehensive loss represents the amortization of actuarial loss included as a component of Cost of revenues, R&D and SG&A in the Consolidated Statements of Operations for the year ended June 28, 2025.

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Employee Pension and Other Benefit Plans” for more details on the computation of net periodic cost for pension plans.

Inertial Labs, Inc.

On January 28, 2025, the Company acquired all of the equity of Inertial Labs, Inc.

(Inertial Labs), a privately held company which specializes in resilient positioning, navigation and timing (PNT) solutions for aerospace, defense and industrial applications.

The acquisition enables the Company to further broaden its solutions offering into the rapidly developing PNT landscape.

The total purchase consideration included approximately $ 134.4 million paid in cash at closing and additional contingent consideration of up to $ 175.0 million, payable upon the achievement of certain revenue targets over the course of a four-year period beginning in January 2025.

As of the acquisition date, the fair value of the contingent consideration was $ 116.2 million.

The net cash paid for the acquisition, with purchase price adjustment, was $ 121.6 million, which reflects the cash paid less cash acquired of $ 16.5 million.

From the contingent consideration of $ 175.0 million, $ 3.4 million shall be set aside for the payment of retention bonuses over the four-year earn-out period to key personnel and service providers, contingent on continued service to the Company.

Any forfeited amount will be removed from the retention bonus pool and re-distributed to the shareholders of Inertial Labs upon the achievement of the earn-out targets.

The portion of the estimated fair value of the earn-out liability allocated to the retention bonuses will be accounted for as post combination expense over the requisite service period.

The cash consideration paid at closing included an escrow payment of $ 1.0 million subject to final net working capital adjustments.

The Company paid $ 3.7 million in our fourth fiscal quarter of 2025 comprised of the net working capital holdback of $ 3.0 million and $ 0.7 million of the purchase price adjustment of $ 1.4 million.

The remainder of the purchase price adjustment of $ 0.7 million and refund of prepaid tax of $ 0.6 million is expected to be paid in fiscal 2026.

In addition, the Company held back $ 15.0 million for indemnity claims.

The acquisition met the definition of a business and has been accounted for in accordance with the authoritative guidance on business combinations;

therefore, the tangible and intangible assets acquired and liabilities assumed were recorded at fair value on the acquisition date.

Acquisition related costs incurred were approximately $ 11.7 million and have been recorded within SG&A expense in the Consolidated Statements of Operations.

These costs included $ 9.5 million in transaction bonuses that were paid at closing to key personnel and service providers of Inertial Labs.

VIAVI SOLUTIONS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The total purchase consideration was allocated to tangible and intangible assets acquired and liabilities assumed based on the preliminary fair value on the acquisition date.

The following table presents the preliminary allocation of the purchase price ( in millions ):

Cash and cash equivalents $ 16.5

Accounts receivable, net 8.1

Inventory, net 26.0

Prepayments and other current assets 1.1

Property, plant and equipment, net 1.9

Identified intangible assets acquired 117.6

Other non-current assets 1.9

Accounts payable ( 1.4 )

Accrued payroll and related expenses ( 0.5 )

Deferred revenue ( 0.3 )

Accrued expenses ( 3.5 )

Other non-current liabilities ( 27.1 )

Total purchase consideration $ 270.6

(1) Goodwill at acquisition date of $ 129.7 million increased by $ 0.6 million for purchase price and measurement period adjustments.

Developed technology relates to products used for PNT solutions for aerospace, defense and industrial applications.

The Company valued the developed technology using the multi-period excess earnings method under the income approach.

This method reflects the present value of the projected cash flows that are expected to be generated by the developed technology.

Significant assumptions used in the discounted cash flow analysis include (i) projected revenues, (ii) discount rate, and (iii) technology obsolescence rate.

The following table sets forth the components of identifiable intangible assets acquired and their estimated useful lives as of the date of acquisition ( in millions, except useful lives ):

Estimated Useful Life Amount

Developed technology 4 to 7 years

Customer relationship 6 years 9.6

Tradename 3 years 0.8

Backlog 2 years 5.2

Total identifiable intangible assets acquired $ 117.6

Goodwill represents the excess of the preliminary estimated purchase consideration over the preliminary estimates of the fair value of the net tangible and intangible assets acquired and has been allocated to the NSE segment.

Goodwill is primarily attributable to expected synergies in the acquired technologies that may be leveraged by the Company in future PNT offerings.

None of the goodwill recognized is deductible for U.S.

income tax purposes.

The Company has included the financial results of Inertial Labs in its Consolidated Financial Statements from the date of acquisition.

Pro forma results of operations have not been presented because the effect of the acquisition was not material to the Consolidated Statements of Operations.

VIAVI SOLUTIONS INC.

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.

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 PNT solutions for critical infrastructure serving both military and civilian applications.

The acquisition enables the Company to broaden its solutions offering into the rapidly developing PNT landscape.

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Acquisition related costs incurred were approximately $ 0.8 million and have been recorded within SG&A expense in the Consolidated Statements of Operations.

Goodwill represents the excess of the purchase consideration over the fair value of the net tangible and intangible assets acquired and has been allocated to the NSE segment.

Goodwill is primarily attributable to expected synergies in the acquired technologies that may be leveraged by the Company in future PNT offerings.

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Other Acquisitions:

On March 2, 2025, the Company entered into a purchase agreement to acquire Spirent Communications plc’s (Spirent) high-speed ethernet and network security business lines and subsequently amended the agreement on May 28, 2025 to also purchase Spirent’s channel emulation testing business (collectively, the HSE, network security and CE businesses) from Keysight Technologies, Inc.

for our NSE segment.

The total purchase consideration of $ 425 million will be paid at closing, subject to customary closing adjustments and conditions.

The Company expects to fund this transaction with proceeds from a Term Loan B.

Refer to “Note 11.

Debt” for further information on the Term Loan B.

The consummation of the acquisition is subject to regulatory approvals and is currently estimated to close by the end of September 2025.

On March 29, 2023, April 21, 2023 and June 8, 2023, the Company completed acquisitions accounted for as asset purchases consisting of cash paid at closing of $ 2.9 million and $ 0.2 million of indemnity holdback.

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

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

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

On May 13, 2022 and May 20, 2022, the Company completed business acquisitions for total consideration of approximately $ 9.5 million in cash paid at close and an earn-out liability of up to $ 3.3 million cash to be paid based on the occurrence or achievement of certain agreed upon targets.

In connection with these acquisitions, the Company recorded $ 7.3 million of developed technology and other intangibles, $ 10.0 million of goodwill, and $ 1.6 million of deferred tax liability resulting from the acquisitions.

The acquired developed technology and other intangible assets are being amortized over their estimated useful lives ranging from one to six years .

On September 17, 2021, the Company acquired all of the equity of one business for approximately $ 1.6 million cash consideration, of which $ 1.2 million was paid with cash on hand and $ 0.4 million remains in current liabilities.

The acquisition was accounted for as an asset purchase under the authoritative guidance.

The developed technology will be amortized over its estimated useful life of five years .

VIAVI SOLUTIONS INC.

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Acquisition related Contingent Consideration

The following table provides a reconciliation of changes in fair value of the Company’s earn-out liabilities for the years ended June 29, 2024 and July 1, 2023, as follows ( in millions ):

The following table provides a reconciliation of changes in fair value of the Company’s earn-out liabilities for the years ended June 28, 2025 and June 29, 2024, as follows ( in millions ):

Balance July 1, 2023 (1)

Additions to Contingent Consideration 29.4

Change in Fair Value measurement ( 9.5 )

Payments of Contingent Consideration ( 0.7 )

Balance July 1, 2023 (1)

Balance June 29, 2024 (2)

Additions to Contingent Consideration 116.2

Change in Fair Value measurement ( 8.3 )

Payments of Contingent Consideration ( 0.7 )

Balance June 28, 2025 (3)(4)

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(2) Included in Other non-current liabilities on the Consolidated Balance Sheets.

(3) Includes $ 41.5 million in Other current liabilities and $ 75.9 million in Other non-current liabilities on the Consolidated Balance Sheets.

(4) Balance is comprised of $ 117.1 million for Inertial Labs and $ 0.3 million for Jackson Labs.

Balance Sheet and Other Details

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Includes both billed and Unbilled Receivables/Contract Assets.

As of June 29, 2024 and July 1, 2023, the Company had total Unbilled Receivables/Contract Assets of $ 16.3 million and $ 13.7 million, respectively.

As of June 28, 2025 and June 29, 2024, the Company had total Unbilled Receivables/Contract Assets of $ 14.1 million and $ 16.3 million, respectively.

Deferred Revenue:

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Revenue is recognized on these items when the revenue recognition criteria are met, generally resulting in ratable recognition over the contract term.

The Company also has short-term and long-term deferred revenues related to undelivered hardware 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 Company also has short-term and long-term deferred revenue related to undelivered hardware 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.

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The following table summarizes the activity related to deferred revenue, for the year ended June 28, 2025 ( in millions ):

June 29, 2024

Deferred revenue:

Balance at beginning of period $ 102.0

Balance as of June 29, 2024

Revenue deferrals for new contracts (1)

Revenue recognized during the period (2)

Balance at end of period (3)

Balance as of June 28, 2025 (3)

Short-term deferred revenue $ 74.1

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The table below presents the activities and balances for allowance for credit losses, as follows ( in millions ):

Balance at Beginning of Period Charged to Costs and Expenses Deduction (1)

Balance at Beginning of Period Acquisition (1)

Charged to Costs and Expenses Deduction (2)

End of Period

Year Ended June 28, 2025 $ 1.6 $ 0.6 $ 1.0 $ ( 1.3 ) $ 1.9

Year Ended July 1, 2023 $ 1.4 $ 0.4 $ ( 0.8 ) $ 1.0

Year Ended June 29, 2024 $ 1.0 $ — $ 1.3 $ ( 0.7 ) $ 1.6

Year Ended July 1, 2023 $ 1.4 $ — $ 0.4 $ ( 0.8 ) $ 1.0

(1) Represents the effect of currency translation adjustments and write-offs of uncollectible accounts, net of recoveries.

(1) Refer to “Note 5.

Acquisitions” for details of acquisition.

(2) Represents the effect of foreign currency translation adjustments and write-offs of uncollectible accounts, net of recoveries.

Inventories, net

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

June 29, 2024 July 1, 2023

June 28, 2025 June 29, 2024

Finished goods $ 52.5 $ 44.6

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

June 29, 2024 July 1, 2023

June 28, 2025 June 29, 2024

Refundable income taxes $ 32.0 $ 28.5

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Advances to contract manufacturers 5.8 5.7

Fair value of forward contracts 4.9 1.7

Transaction tax receivables 0.2 3.3

Assets held for sale — 2.5

Fair value of forward contracts 1.7 3.5

Other current assets 12.5 10.5

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The following table presents the components of property, plant and equipment, net, as follows ( in millions ):

June 29, 2024 July 1, 2023

June 28, 2025 June 29, 2024

Land $ 19.9 $ 19.5

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Property, plant and equipment, gross 670.2 636.7

Accumulated depreciation and amortization

Accumulated depreciation

( 438.3 ) ( 408.5 )

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

June 29, 2024 July 1, 2023

Operating ROU assets $ 35.8 $ 40.4

June 28, 2025 June 29, 2024

Operating ROU assets, net $ 34.1 $ 35.8

Long-term restricted cash 4.9 5.5

Deferred contract cost 3.0 2.5

Long-term investment (Note 7)

Deposits 2.4 2.4

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

June 29, 2024 July 1, 2023

Restructuring accrual (Note 13)

June 28, 2025 June 29, 2024

Fair value of contingent consideration (Note 5)

Acquisition related holdback and related accruals 16.5 —

Operating lease liabilities

Income tax payable 8.2 5.3

Interest payable 5.1 5.5

Transaction tax payable 6.0 4.0

Warranty accrual 5.9 3.4

Interest payable 5.1 5.1

Restructuring accrual (Note 13)

Fair value of forward contracts 3.1 1.5

Acquisition related holdback and related accruals — 4.1

Fair value of contingent consideration (Note 5)

Other 14.3 7.9

Other current liabilities 8.3 14.3

Other current liabilities $ 108.3 $ 57.5

Other Non-Current Liabilities

The following table presents the components of other non-current liabilities, as follo ws ( in millions ):

June 29, 2024 July 1, 2023

June 28, 2025 June 29, 2024

Fair value of contingent consideration (Note 5)

Pension and post-employment benefits 54.1 51.2

Operating lease liabilities 25.7 29.4

Long-term deferred revenue 28.2 25.7

Uncertain tax position 17.0 15.8

Operating lease liabilities 24.1 25.7

Financing obligation 15.5 15.7

Uncertain tax position 11.4 17.0

Deferred tax liability 6.0 11.7

Fair value of contingent consideration (Note 5)

Warranty accrual 4.0 4.8

Asset retirement obligations 3.5 3.0

Restructuring accrual (Note 13)

Other 7.3 8.0

Warranty accrual 0.8 4.0

Restructuring accrual — 0.8

Other non-current liabilities 8.1 7.3

Other non-current liabilities $ 227.6 $ 171.6

Interest and Other Income, net

The following table presents the components of interest and other income, net, as follows ( in millions ):

June 29, 2024 July 1, 2023 July 2, 2022

June 28, 2025 June 29, 2024 July 1, 2023

Interest income $ 13.1 $ 18.9 $ 10.2

Foreign exchange (loss) gain, net ( 3.1 ) ( 2.2 ) 1.4

Foreign exchange loss, net ( 1.7 ) ( 3.1 ) ( 2.2 )

Gain on litigation settlement — 7.3 —

Other (loss) income, net ( 1.4 ) ( 0.4 ) 0.4

Other loss, net ( 0.3 ) ( 1.4 ) ( 0.4 )

Interest and other income, net $ 11.1 $ 21.7 $ 7.6

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Short-Term Investments

As of June 28, 2025, the Company’s short-term investments of $ 1.7 million were primarily related to the deferred compensation plan, of which $ 1.6 million was invested in equity securities.

As of June 29, 2024, the Company’s short-term investments of $ 19.9 million were comprised of 30 -day term deposits of $ 18.4 million and trading securities related to the deferred compensation plan of $ 1.5 million, of which $ 1.4 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 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.

Strategic Investment

During the first fiscal quarter of 2025, the Company invested $ 3.0 million in a non-marketable equity security in a privately held company.

The investment is included in Other non-current assets on the Consolidated Balance Sheets and is classified as Level 3 within the fair value hierarchy.

This investment is carried at cost and because the investment does not have a readily determinable fair value, it will be adjusted for changes resulting from observable price changes under the Measurement Alternative methodology.

There were no impairments or adjustments to the carrying value for the year ended June 28, 2025.

Equity Investment

The Company acquired an equity interest in Sensorsan Sensor Teknolojileri Anonim Sirketi (Sensorsan), a privately held entity and owns 40 % percent of Sensorsan, through its acquisition of Inertial Labs.

The Company accounts for its investment in Sensorsan under the equity method of accounting.

Under the equity method, the Company recognizes income or loss from its pro-rata share of Sensorsan’s net income or loss, which changes the carrying value of the Sensorsan investment.

The Company’s share of Sensorsan’s net income for the period from acquisition date until June 28, 2025 was $ 0.6 million.

As of June 28, 2025, the carrying value of the Company’s investment in Sensorsan was $ 1.3 million, included in Other non-current assets on the Consolidated Balance Sheets.

The Company sells certain products to Sensorsan.

During the year ended June 28, 2025, revenue from sales to Sensorsan was $ 1.8 million and the accounts receivable balance was $ 1.4 million.

VIAVI SOLUTIONS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Non-Designated Foreign Currency Forward Contracts

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Therefore, the fair value of these contracts of $ 4.9 million and $ 3.1 million is reflected as Prepayments and other current assets and Other current liabilities on the Consolidated Balance Sheets, respectively.

As of July 1, 2023, the fair value of these contracts of $ 3.5 million and $ 2.4 million is reflected as Prepayments and other current assets and Other current liabilities on the Consolidated Balance Sheets, respectively.

As of June 29, 2024, the fair value of these contracts of $ 1.7 million and $ 1.5 million is reflected as Prepayments and other current assets and Other current liabilities on the Consolidated Balance Sheets, respectively.

The forward contracts outstanding and not effectively closed, with a term of less than 120 days, were transacted near fiscal year ends;

therefore, the fair value of the contracts was minimal as of June 29, 2024 and July 1, 2023.

As of June 29, 2024 and July 1, 2023, the notional amounts of the forward contracts that the Company held to purchase foreign currencies were $ 81.9 million and $ 87.5 million, respectively, and the notional amounts of forward contracts that Company held to sell foreign currencies were $ 26.8 million and $ 19.3 million, respectively.

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

therefore, the fair value of the contracts was minimal as of June 28, 2025 and June 29, 2024.

As of June 28, 2025 and June 29, 2024, the notional amounts of the forward contracts that the Company held to purchase foreign currencies were $ 60.4 million and $ 81.9 million, respectively, and the notional amounts of forward contracts the Company held to sell foreign currencies were $ 24.1 million and $ 26.8 million, respectively.

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

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 a gain of $ 1.2 million for the years ended June 29, 2024 and July 1, 2023, respectively.

The foreign exchange forward contracts incurred losses of $ 1.0 million and $ 0.7 million for the years ended June 28, 2025 and June 29, 2024, respectively.

VIAVI SOLUTIONS INC.

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

June 29, 2024 July 1, 2023

June 28, 2025 June 29, 2024

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

9 unchanged sentences

4.9 — 4.9 — 1.7 — 1.7 —

Non-marketable equity security (5)

3.0 — — 3.0 — — — —

Total assets $ 238.8 $ 230.6 $ 5.2 $ 3.0 $ 298.8 $ 296.8 $ 2.0 $ —

6 unchanged sentences

(2) Includes, as of June 28, 2025, $ 222.4 million in Cash and cash equivalents, $ 3.5 million in Restricted cash and $ 3.1 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.

Includes, as of June 29, 2024, $ 286.7 million in Cash and cash equivalents, $ 4.9 million in Restricted cash, and $ 3.7 million in Other non-current assets on the Consolidated Balance Sheets.

(3) Included in Short-term investments on the Consolidated Balance Sheets.

(4) Included in Prepayments and other current assets on the Consolidated Balance Sheets.

(5) Included in Other non-current assets on the Consolidated Balance Sheets.

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

(7) As of June 28, 2025, includes certain amounts in Other current liabilities and Other non-current liabilities on the Consolidated Balance Sheets.

As of June 29, 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.

Other Fair Value Measures

Fair Value of Debt:

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.

If measured at fair value on the Consolidated Balance Sheets, the Company’s 3.75 % Senior Notes (2029 Notes) and 1.625 % Senior Convertible Notes (2026 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 ):

June 29, 2024 July 1, 2023

June 28, 2025 June 29, 2024

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

3 unchanged sentences

252.0 — 252.0 — 238.1 — 238.1 —

1.00 % Senior Convertible Notes (1)

— — — — 95.6 — 95.6 —

Total liabilities $ 625.6 $ — $ 625.6 $ — $ 577.0 $ — $ 577.0 $ —

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

See “Note 11.

Debt” for further discussion of the Company’s debt.

VIAVI SOLUTIONS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Changes in the carry value of goodwill allocated segment are as follows (in millions) :

Enablement (1)

Optical Security

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

Network and Service

Enablement Optical Security

and Performance

2 unchanged sentences

$ 413.0 $ 42.2 $ 455.2

Acquisitions 60.0 — — 60.0

Measurement period adjustment ( 0.5 ) — — ( 0.5 )

Currency translation ( 1.3 ) — ( 1.3 )

Balance as of July 1, 2023 (3)

$ 399.2 $ 13.8 $ 42.2 $ 455.2

Currency translation ( 1.1 ) ( 0.2 ) — ( 1.3 )

Other adjustment (2)

2 unchanged sentences

$ 410.7 $ 42.2 $ 452.9

(1) Balance as of July 2, 2022 adjusted to reflect a reclass of $ 1.2 million from Service Enablement to Network Enablement due to a product line movement.

(2) Gross goodwill balances for NE, SE and OSP were $ 634.7 million, $ 285.2 million and $ 126.7 million, respectively, as of July 2, 2022.

Accumulated impairment for NE, SE and OSP was $ 301.9 million, $ 272.6 million and $ 84.5 million, respectively, as of July 2, 2022.

(3) Gross goodwill balances for NE, SE and OSP were $ 701.1 million, $ 286.4 million and $ 126.7 million, respectively, as of July 1, 2023.

Accumulated impairment for NE, SE and OSP was $ 301.9 million, $ 272.6 million and $ 84.5 million, respectively, as of July 1, 2023.

Acquisition 129.7 — 129.7

Other adjustments (4)

Currency translation 12.5 — 12.5

Balance as of June 28, 2025 (5)

$ 553.5 $ 42.2 $ 595.7

(1) Gross goodwill balances for NSE and OSP were $ 987.5 million and $ 126.7 million, respectively, as of July 1, 2023.

Accumulated impairment for NSE and OSP was $ 574.5 million and $ 84.5 million, respectively, as of July 1, 2023.

(2) Adjustment related to goodwill acquired as part of a prior acquisition.

(5) Gross goodwill balances for NE, SE and OSP were $ 700.0 million, $ 285.2 million and $ 126.7 million, respectively, as of June 29, 2024.

Accumulated impairment for NE, SE and OSP was $ 301.9 million, $ 272.6 million and $ 84.5 million, respectively, as of June 29, 2024.

(3) Gross goodwill balances for NSE and OSP were $ 985.2 million and $ 126.7 million, respectively, as of June 29, 2024.

Accumulated impairment for NSE and OSP was $ 574.5 million and $ 84.5 million, respectively, as of June 29, 2024.

(4) See “Note 5.

Acquisitions” of the Notes to Consolidated Financial Statement for additional information related to the Company’s acquisitions.

(5) Gross goodwill balances for NSE and OSP were $ 1,128.0 million and $ 126.7 million, respectively, as of June 28, 2025.

Accumulated impairment for NSE and OSP was $ 574.5 million and $ 84.5 million, respectively, as of June 28, 2025.

Impairment of Goodwill

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

The Company determined that, based on its organizational structure and the financial information that is provided to and reviewed by the Company’s CODM during fiscal 2024, 2023 and 2022 that its reporting units were NE, SE and OSP.

No indications of impairment were identified under the qualitative assessment of goodwill impairment for fiscal years ending on June 29, 2024 and July 2, 2022.

As a result of the segment change during the fourth fiscal quarter of 2025 discussed in “Note 19.

Operating Segments and Geographic Information,'' management performed a goodwill impairment analysis on the reporting units prior to and after the change and did not identify an impairment.

No indications of impairment were identified under the qualitative assessment of goodwill impairment for fiscal years ending on June 28, 2025 and June 29, 2024.

In fiscal 2023, the Company performed a quantitative assessment of goodwill impairment for all reporting units.

3 unchanged sentences

Acquired Developed Technology and Other Intangibles

The following tables present details of the Company’s acquired developed technology, customer relationships and other intangibles as of June 29, 2024, and July 1, 2023 ( in millions ):

The following tables present details of the Company’s acquired developed technology, customer relationships and other intangibles as of June 28, 2025, and June 29, 2024 ( in millions, except useful lives ):

As of June 28, 2025 Weighted-Average Remaining Useful Life Gross Carrying Amount Accumulated Amortization Net

3 unchanged sentences

Total intangibles $ 787.6 $ ( 656.0 ) $ 131.6

As of July 1, 2023 Weighted-Average Remaining Useful Life Gross Carrying Amount Accumulated Amortization Net

Acquired developed technology (2)

3.9 years $ 438.5 $ ( 390.2 ) $ 48.3

As of June 29, 2024 Weighted-Average Remaining Useful Life Gross Carrying Amount Accumulated Amortization Net

Acquired developed technology 2.9 years $ 436.2 $ ( 401.9 ) $ 34.3

Customer relationships 1.5 years 194.8 ( 191.0 ) 3.8

2 unchanged sentences

(1) Other intangibles consist of patents, proprietary know-how and trade secrets, trademarks and trade names.

(2) During fiscal 2023, we recorded a $ 0.6 million non-cash charge due to the discontinued use of certain intellectual property.

This charge has been recorded within SG&A in the Consolidated Statements of Operations.

Based on the carrying amount of acquired developed technology, customer relationships and other intangibles as of June 28, 2025, and assuming no future impairment of the underlying assets, the estimated future amortization is as follows ( in millions ):

Thereafter 19.7

Total amortization $ 131.6

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

As of June 29, 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, as follows ( in millions ):

June 29, 2024 July 1, 2023

As of June 28, 2025 and June 29, 2024, 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 follows ( in millions ):

June 28, 2025 June 29, 2024

Principal amount of 1.625 % Senior Convertible Notes

Unamortized 1.625 % Senior Convertible Notes debt discount

Unamortized 1.625 % Senior Convertible Notes debt issuance cost

6 unchanged sentences

Unamortized 1.625 % Senior Convertible Notes debt discount

( 8.1 ) ( 12.9 )

Unamortized 1.625 % Senior Convertible Notes debt issuance cost

( 1.3 ) ( 2.1 )

Long-term debt $ 396.3 $ 636.0

The Company was in compliance with all debt covenants as of June 29, 2024 and July 1, 2023.

The Company was in compliance with all debt covenants as of June 28, 2025 and June 29, 2024.

1.625 % Senior Convertible Notes (2026 Notes)

6 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 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 within Long-term debt (as a contra-balance) on the Consolidated Balance Sheets and will be amortized as an adjustment to interest expense on a straight-line basis until maturity.

The 2026 Notes are an unsecured obligation of the Company and bear interest at an annual rate of 1.625 %, payable in cash semi-annually in arrears on March 15 and September 15 of each year, beginning September 15, 2023.

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 within Long-term debt (as a contra-balance) on the Consolidated Balance Sheets and will be amortized to interest expense using the straight-line method until maturity.

The 2026 Notes are an unsecured obligation of the Company and bear interest at an annual rate of 1.625 %, payable semi-annually in arrears on March 15 and September 15 of each year, beginning September 15, 2023.

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

The 2026 Notes may be converted under certain circumstances, based on an initial conversion rate of 75.7963 shares (equivalent to an initial conversion price of approximately $ 13.19 per share) at the option of the holders into cash up to the principal amount, with the remaining amount converted into cash, shares of the Company’s common stock, or a combination of cash and shares of the Company’s common stock at the Company’s election.

The initial conversion price represents a 22.5 % premium to the closing price of the Company’s common stock on the pricing date, March 1, 2023, which will be subject to customary anti-dilution adjustments.

VIAVI SOLUTIONS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The 2026 Notes may be converted at any time on or prior to the close of business on the business day immediately preceding December 15, 2025, in multiples of $ 1,000 principal amount, at the option of the holder under the following circumstances:

19 unchanged sentences

In connection with the issuance of the 2029 Notes, the Company incurred $ 7.0 million of issuance costs.

The debt issuance costs were capitalized and are being amortized to interest expense using the straight-line method.

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

The 2029 Notes are an unsecured obligation of the Company and bear annual interest of 3.75 %, payable semi-annually in arrears on April 1 and October 1 of each year, beginning April 1, 2022.

5 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.

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

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

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.

During fiscal 2022, the Company entered into separate privately-negotiated agreements with certain holders of the 2023 Notes, settling $ 156.9 million principal in exchange for an aggregate of 2.0 million shares of its common stock, par value $ 0.001 per share, and $ 168.5 million in cash.

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

1.00 % Senior Convertible Notes (2024 Notes)

3 unchanged sentences

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.

During fiscal 2022, the Company entered into separate privately-negotiated agreements with certain holders of the 2024 Notes, settling $ 236.1 million principal in exchange for an aggregate of 8.6 million shares of its common stock, par value $ 0.001 per share, and $ 178.8 million in cash.

During fiscal 2023 the Exchange Transaction resulted in the reduction of $ 127.5 million principal of the 2024 Notes.

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

On September 2, 2021, the Company entered into separate privately-negotiated agreements with certain holders of its 2023 and 2024 Notes.

The Company settled $ 93.8 million principal amount of the 2023 Notes and $ 181.2 million principal amount of the 2024 Notes in exchange for an aggregate of 10.6 million shares of its common stock, par value $ 0.001 per share, and $ 196.5 million in cash.

The Company recorded a loss of $ 85.9 million in connection with the settlement transactions which is presented as Loss on convertible note settlement in the Consolidated Statements of Operations.

On November 17, 2021 and November 22, 2021, the Company entered into separate privately-negotiated agreements with certain holders of its 2023 and 2024 Notes.

The Company settled $ 20.6 million principal amount of the 2023 Notes and $ 25.0 million principal amount of the 2024 Notes in exchange for $ 59.0 million in cash.

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 Consolidated Statements of Operations.

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 2023 and 2024 Notes.

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.

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 Consolidated Statements of Operations.

On June 3, 2022, the Company entered into separate privately-negotiated agreements with certain holders of its 2023 and 2024 Notes.

The Company settled $ 19.3 million principal amount of the 2023 Notes and $ 3.1 million principal amount of the 2024 Notes in exchange for $ 27.1 million in cash.

The Company recorded a loss of $ 3.1 million in connection with the settlement transactions which is presented as Loss on convertible note settlement in the Consolidated Statements of Operations.

Senior Secured Asset-Based Revolving Credit Facility

4 unchanged sentences

The obligations under the Credit Agreement are secured by substantially all of the assets of the Company and those of its subsidiaries that are borrowers and guarantors under the Credit Agreement.

The Company is currently considering reducing the commitment under the Senior Secured Asset-Based Revolving Credit Facility to $ 200 million to be in line with borrowing base capacity and extend the maturity.

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 adjusted Term Canadian Overnight Repo Rate Average (CORRA) 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 adjusted Term Canadian Overnight Repo Rate Average (CORRA) 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.

1 unchanged sentence

As of June 28, 2025, we had no borrowings under this facility and our available borrowing capacity was approximately $ 170.8 million, net of outstanding standby letters of credit of $ 4.4 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 first quarter of fiscal 2022.

In connection with the entry into the Senior Secured Asset-Based Revolving Credit Facility in December 2021, the Company terminated this facility.

In March 2025, we obtained commitments for a $ 425 million 7-year term loan facility the proceeds of which would be available, subject to customary conditions, to fund our pending acquisition of Spirent’s HSE and network security business from Keysight Technologies, Inc.

We subsequently marketed and upsized to a $ 600 million 7-year term loan facility and successfully allocated the loan to prospective lenders at an initial interest rate of SOFR+ 2.50 % and an original issue price of 99.75 %.

The incremental $ 175 million is intended for general corporate purposes.

The term loan funding, as upsized, remains subject to customary closing conditions and the satisfaction or waiver of all closing conditions to the pending acquisition.

VIAVI SOLUTIONS INC.

1 unchanged sentence

Interest Expense

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

June 29, 2024 July 1, 2023 July 2, 2022

Interest expense-contractual interest $ 19.7 $ 19.2 $ 16.5

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

June 28, 2025 June 29, 2024 July 1, 2023

Contractual interest $ 19.1 $ 19.7 $ 19.2

Amortization of debt issuance cost 2.4 2.6 2.5

2 unchanged sentences

Total Interest Expense $ 30.0 $ 30.9 $ 27.1

The effective interest rate on the Company’s contractual debt was 2.77 %, 2.65 % and 2.25 % for fiscal years 2024, 2023 and 2022, respectively.

The effective interest rate on the Company’s contractual debt was 2.93 %, 2.77 % and 2.65 % for fiscal 2025, 2024 and 2023, respectively.

The Company is a lessee in several operating leases, primarily real estate facilities for office space.

2 unchanged sentences

Lease expense and cash flow information related to our operating leases is as follows ( in millions ):

June 29, 2024 July 1, 2023

June 28, 2025 June 29, 2024

Operating lease costs (1)

4 unchanged sentences

Weighted-average discount rate 6.0 % 5.6 %

(1) Total variable lease costs were immaterial during the fiscal years ended June 29, 2024 and July 1, 2023.

(1) Total variable lease costs were immaterial during the fiscal years ended June 28, 2025 and June 29, 2024.

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

8 unchanged sentences

The Company derecognizes ARO liabilities when the related obligations are settled.

As of June 29, 2024 and July 1, 2023, the Consolidated Balance Sheets included ARO balances of $ 1.2 million and $ 0.5 million, respectively, in Other current liabilities and $ 3.0 million and $ 3.8 million, respectively, in Other non-current liabilities.

As of June 28, 2025 and June 29, 2024, the Consolidated Balance Sheets included ARO balances of $ 0.4 million and $ 1.2 million, respectively, in Other current liabilities and $ 3.5 million and $ 3.0 million, respectively, in Other non-current liabilities.

A summary of the activity in the ARO accrual is outlined below ( in millions ):

Balance at Beginning of Period Liabilities Incurred Liabilities Settled Accretion Expense Balance at End of Period

Balance at Beginning of Period Liabilities Incurred Liabilities Settled Accretion Expense Revisions to Estimates Balance at End of Period

Year ended June 28, 2025 $ 4.2 $ 0.4 $ ( 0.8 ) $ — $ 0.1 $ 3.9

Year ended July 1, 2023 $ 4.2 $ 0.3 $ ( 0.3 ) $ 0.1 $ 4.3

Year ended June 29, 2024 $ 4.3 $ — $ ( 0.2 ) $ 0.1 $ — $ 4.2

VIAVI SOLUTIONS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Restructuring

3 unchanged sentences

Fiscal 2024 Plan

During the fourth quarter of fiscal 2024, management approved a restructuring and workforce reduction plan (the Fiscal 2024 Plan) across various functions intended to improve operational efficiencies and better align the Company’s workforce with current business needs.

During the fourth quarter of fiscal 2024, management approved a restructuring and workforce reduction plan (the Fiscal 2024 Plan) across our NSE and OSP segments and Corporate (Corp) functions intended to improve operational efficiencies and better align the Company’s workforce with current business needs.

The Company expects approximately 7 % of its global workforce to be affected.

The Company anticipates the Fiscal 2024 Plan to be substantially complete by the end of fiscal 2025.

The Company anticipates the Fiscal 2024 Plan to be substantially complete by the end of the second quarter of fiscal 2026.

Fiscal 2023 Plan

During the second quarter of fiscal 2023, management approved a restructuring and workforce reduction plan (the Fiscal 2023 Plan) to better align the Company’s workforce with current business needs and strategic growth opportunities.

The restructuring and workforce reduction plan, initiated in the second quarter of fiscal 2023 (the Fiscal 2023 Plan) across various functions to better align the Company’s workforce with current business needs and strategic growth opportunities, was completed in the first quarter of fiscal 2025.

The Fiscal 2023 Plan impacted approximately 5 % of the Company’s global workforce.

The first phase of the Fiscal 2023 Plan impacted our NSE and OSP segments and Corporate (Corp) functions and was substantially complete as of March 30, 2024.

The second phase of the Fiscal 2023 Plan is primarily focused on reducing costs in our SE segment and was substantially complete as of June 29, 2024.

VIAVI SOLUTIONS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

A summary of the activity in the restructuring accrual for the fiscal year ended June 28, 2025 is outlined below ( in millions ):

Balance as of July 1, 2023 Restructuring and related charges (benefits) Cash Settlements Balance as of June 29, 2024

Balance as of June 29, 2024 Restructuring and related charges (benefits) Cash settlements Foreign currency translation adjustments Balance as of June 28, 2025

Fiscal 2024 Plan

3 unchanged sentences

Fiscal 2023 Plan

NSE/Corp 3.5 ( 0.9 ) ( 2.6 ) —

OSP 0.6 — ( 0.6 ) —

Fiscal 2023 Plan Phase I 4.1 ( 0.9 ) ( 3.2 ) —

NSE 0.3 ( 0.2 ) ( 0.1 ) — —

Fiscal 2023 Plan Phase II 1.7 ( 0.3 ) ( 1.1 ) 0.3

Fiscal 2023 Plan 0.3 ( 0.2 ) ( 0.1 ) — —

$ 14.9 $ 0.7 $ ( 12.4 ) $ 0.3 $ 3.5

(1) Includes certain amounts in Other current liabilities and Other non-current liabilities on the Consolidated Balance Sheets.

(1) Included in Other current liabilities on the Consolidated Balance Sheet as of June 28, 2025 and certain amounts in Other current liabilities and Other non-current liabilities on the Consolidated Balance Sheet as of June 29, 2024.

During fiscal 2024, the Company recorded restructuring charges of $ 14.8 million related to the Fiscal 2024 Plan and a benefit of $ 1.2 million related to the Fiscal 2023 Plan.

During fiscal 2023, the Company recorded restructuring charges of $ 12.1 million related to the Fiscal 2023 Plan.

During fiscal 2022, the Company recorded a benefit of $ 0.1 million related to a restructuring plan initiated in fiscal 2019.

VIAVI SOLUTIONS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The Company’s income (loss) before income taxes consisted of the following ( in millions ):

June 29, 2024 July 1, 2023 July 2, 2022

June 28, 2025 June 29, 2024 July 1, 2023

Domestic $ ( 88.8 ) $ ( 95.8 ) $ ( 37.6 )

Foreign 127.4 107.4 98.3

Income before income taxes $ 11.6 $ 60.7 $ 65.1

VIAVI SOLUTIONS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Income before income taxes and equity investment earnings $ 38.6 $ 11.6 $ 60.7

The Company’s income tax expense (benefit) consisted of the following ( in millions ):

June 29, 2024 July 1, 2023 July 2, 2022

June 28, 2025 June 29, 2024 July 1, 2023

Current $ — $ 0.3 $ —

Deferred ( 23.2 ) — —

Total federal income tax expense 0.3 — —

Total federal income tax (benefit) expense ( 23.2 ) 0.3 —

Current ( 7.7 ) 3.3 2.6

Deferred ( 1.8 ) — —

Total state income tax expense (benefit) 3.3 2.6 ( 2.2 )

Total state income tax (benefit) expense ( 9.5 ) 3.3 2.6

Current 41.0 32.8 27.6

2 unchanged sentences

Total income tax expense $ 4.4 $ 37.4 $ 35.2

The state current expense primarily relates to the impact of additional capitalization of R&D costs.

The federal deferred benefit relates to the release of the valuation allowance related to the acquisition of Inertial Labs.

The state current benefit primarily relates to the release of state income tax reserves due to the lapse in the statute of limitations.

The state deferred benefit relates to the release of the valuation allowance related to the acquisition of Inertial Labs.

The foreign current expense primarily relates to the Company’s profitable operations in certain foreign jurisdictions.

The foreign deferred tax expense primarily relates to deferred tax expense accrued on intercompany dividends.

The foreign deferred tax benefit primarily relates to the payment of withholding tax on intercompany dividends that were previously accrued as a deferred tax liability.

VIAVI SOLUTIONS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

A reconciliation of the Company’s income tax expense at the federal statutory rate to the income tax expense at the effective tax rate is as follows ( in millions ):

June 29, 2024 July 1, 2023 July 2, 2022

June 28, 2025 June 29, 2024 July 1, 2023

Income tax expense computed at federal statutory rate $ 8.1 $ 2.4 $ 12.8

11 unchanged sentences

Disallowed compensations 3.2 2.0 3.3

Senior Convertible Notes settlements — — ( 8.3 )

Acquisition Costs 0.5 — —

Other ( 0.3 ) ( 0.5 ) ( 0.2 )

Income tax expense $ 4.4 $ 37.4 $ 35.2

VIAVI SOLUTIONS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The components of the Company’s net deferred taxes consisted of the following ( in millions ):

Balance as of

June 29, 2024 July 1, 2023 July 2, 2022

June 28, 2025 June 29, 2024 July 1, 2023

Gross deferred tax assets:

13 unchanged sentences

Tax on unrepatriated earnings ( 4.9 ) ( 9.5 ) ( 13.7 )

Foreign branch taxes ( 14.6 ) ( 15.0 ) ( 17.8 )

Foreign branch tax adjustments ( 25.2 ) ( 14.6 ) ( 15.0 )

Other ( 17.4 ) ( 16.5 ) ( 17.7 )

1 unchanged sentence

Total net deferred tax assets $ 81.1 $ 70.8 $ 73.0

As of June 29, 2024, the Company had federal, state and foreign tax net operating loss carryforwards of $ 1,450.7 million, $ 358.0 million and $ 429.6 million, respectively, and federal and state research tax credit carryforwards of $ 83.3 million and $ 54.7 million, respectivel y.

VIAVI SOLUTIONS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

As of June 28, 2025, the Company had federal, state and foreign tax net operating loss carryforwards of $ 1,218.6 million, $ 314.9 million and $ 470.5 million, respectively, and federal and state research tax credit carryforwards of $ 84.6 million and $ 55.2 million, respectively.

The federal tax net operating loss carryforwards start to expire in fiscal 2026 and at various dates through 2038, if not utilized.

The federal research credit carryforwards start to expire fiscal 2025 and at various dates through fiscal 2044 if not utilized.

The federal research tax credit carryforwards start to expire in fiscal 2026, and at various dates through fiscal 2045, if not utilized.

The state tax net operating loss carryforwards start to expire in fiscal 2026 and at various dates through 2045, if not utilized.

Th e state research credit start to expire in fiscal 2025 but a majority of the state credits have an indefinite carryforward period.

The state research tax credit starts to expire in fiscal 2026 but a majority of the state credits have an indefinite carryforward period.

In addition, a portion of the foreign tax net operating loss and capital loss carryforwards have an indefinite carryforward period.

4 unchanged sentences

The tax expense of these transactions was approximately $ 1.2 million.

During fiscal 2022, the Company completed a planned internal transaction moving certain of VIAVI’s intellectual properties out of a foreign jurisdiction where tax rates are scheduled to increase to the U.S.

entity established in fiscal 2021 to own and manage VIAVI’s other intellectual properties.

The Company recorded foreign tax expense of $ 13.2 million related to this transaction.

Foreign withholdi ng taxes associated with the repatriation of earnings of foreign subsidiaries have not been provided on $ 19.2 million of undistributed earnings for certain foreign subsidiaries.

The Company intends to reinvest these earnings indefinitely outside of the United States.

The Company intends to reinvest these earnings indefinitely outside of the U.S.

The Company estimates that an additional $ 1.9 million of foreign withholding taxes would have to be provided if these earnings were repatriated back to the U.S.

VIAVI SOLUTIONS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The valuation allowance decreased by $ 15.5 million in fiscal 2024, increased by $ 30.7 million in fiscal 2023, and increased by $ 11.9 million in fiscal 2022.

The decrease during fiscal 2024 was primarily due to the amortization of intangibles assets, utilization of federal net operating losses (NOLs) offset by an increase in the capitalization of federal research expenditures in the U.S.

The valuation allowance decreased by $ 69.7 million in fiscal 2025, decreased by $ 15.5 million in fiscal 2024, and increased by $ 30.7 million in fiscal 2023.

The decrease during fiscal 2025 was primarily due to the increase in the deferred tax liability that resulted from the acquisition of Inertial Labs and the expiration of federal net operating losses (NOLs) in the U.S.

The decrease during fiscal 2024 was primarily due to the amortization of intangibles assets and utilization of NOLs, offset by an increase in the capitalization of federal research expenditures in the U.S.

The increase during fiscal 2023 was primarily due to the increase in capitalization of federal research expenditures in the U.S.

This includes the effects of the mandatory capitalization and amortization of R&D expenses incurred in fiscal 2023, as required by the 2017 Tax Cuts and Jobs Act (Tax Act) .

The increase during fiscal 2022 was primarily due to the increase in capitalization of federal research expenditures in the U.S.

The following table provides information about the activity of our deferred tax valuation allowance (in millions) :

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Year Ended June 28, 2025 $ 1,336.0 $ 78.3 $ ( 148.0 ) $ 1,266.3

Year Ended July 1, 2023 $ 1,320.8 $ 114.4 $ ( 83.7 ) $ 1,351.5

Year Ended June 29, 2024 $ 1,351.5 $ 132.7 $ ( 148.2 ) $ 1,336.0

Year Ended July 1, 2023 $ 1,320.8 $ 114.4 $ ( 83.7 ) $ 1,351.5

1 unchanged sentence

(2) Deductions include current year releases credited to expenses and current year reductions due to decreases in net deferred tax assets, return to provision true-ups, other adjustments and increases in deferred tax liabilities.

VIAVI SOLUTIONS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

A reconciliation of unrecognized tax benefits between July 2, 2022 and June 28, 2025 is as follows ( in millions ):

2 unchanged sentences

Additions based on tax positions related to prior year 0.1

Reduction based on tax positions related to prior year ( 2.6 )

Reductions based on tax positions related to prior year ( 1.1 )

Reductions for lapse of statute of limitations ( 0.2 )

1 unchanged sentence

Additions based on tax positions related to current year 1.2

Addition based on tax positions related to prior year 0.1

Reduction based on tax positions related to prior year ( 1.1 )

Additions based on tax positions related to prior year 0.5

Reductions based on tax positions related to prior year ( 1.9 )

Reductions for lapse of statute of limitations ( 0.2 )

Balance at July1, 2023 54.9

Balance at June 29, 2024 54.5

Additions based on tax positions related to current year 2.2

Addition based on tax positions related to prior year 0.5

Reduction based on tax positions related to prior year ( 1.9 )

Additions based on tax positions related to prior year 0.1

Reductions based on tax positions related to prior year ( 4.1 )

Reductions for lapse of statute of limitations ( 6.5 )

1 unchanged sentence

The unrecognized tax benefits relate primarily to the allocations of revenue and costs among the Company’s global operations and the validity of some U.S.

Included in the balance of unrecognized tax benefits at June 29, 2024 are $ 13.2 million of tax benefits that, if recognized, would impact the effective tax rate.

Also included in the balance of unrecognized tax benefits at June 29, 2024 are $ 37.6 million of tax benefits that, if recognized, would result in adjustments to the valuation allowance.

VIAVI SOLUTIONS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Included in the balance of unrecognized tax benefits at June 28, 2025 is $ 7.9 million of tax benefits that, if recognized, would impact the effective tax rate.

Also included in the balance of unrecognized tax benefits at June 28, 2025 is $ 34.6 million of tax benefits that, if recognized, would result in adjustments to the valuation allowance.

The Company’s policy is to recognize accrued interest and penalties related to unrecognized tax benefits within th e income tax provisio n.

The amount of interest and penalties accrued as of June 29, 2024, July 1, 2023 and July 2, 2022 was approximately $ 3.8 million, $ 2.9 million, and $ 2.1 million, respectively.

The amount of interest and penalties accrued as of June 28, 2025, June 29, 2024 and July 1, 2023 were approximately $ 3.4 million, $ 3.8 million, and $ 2.9 million, respectively.

T he 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.

2 unchanged sentences

The Company believes that adequate amounts have been provided for any adjustments that may result from these examinations.

VIAVI SOLUTIONS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The following table summarizes the Company’s major tax jurisdictions and the tax years that remain subject to examination by such jurisdictions as of June 28, 2025:

17 unchanged sentences

The following table summarizes share repurchase activity related to the Company’s stock repurchase program (in millions, except average price per share amounts) :

June 29, 2024 July 1, 2023 July 2, 2022

June 28, 2025 June 29, 2024 July 1, 2023

Total number of shares repurchased 2.0 2.3 7.3

2 unchanged sentences

Remaining authorization at end of period $ 198.4 $ 214.8 $ 234.8

VIAVI SOLUTIONS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The total purchase price of these repurchases was reflected as a decrease to common stock based on the stated par value per share with the remainder charged to accumulated deficit.

All common shares repurchased during fiscal 2025, 2024 and 2023 have been canceled and retired.

On August 16, 2022, the Inflation Reduction Act of 2022 (IRA) was enacted into law.

The Company evaluated the provisions of the new legislation, which included an excise tax on share repurchases.

The IRA was effective as of January 1, 2023 and repurchase activity after that date resulted in an accrual of $ 0.3 million for excise tax recorded in Accrued expenses on the Consolidated Balance Sheets.

Preferred Stock

2 unchanged sentences

Subsequent issuance of any preferred stock by the Company’s Board of Directors, under some circumstances, could have the effect of delaying, deferring or preventing a change in control.

VIAVI SOLUTIONS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Stock-Based Compensation

1 unchanged sentence

Stock Award Plans

The Company’s Amended and Restated 2003 Plan provides for the granting of stock options, stock appreciation rights (SARs), dividend equivalent rights, restricted stocks, restricted stock units, performance units and performance shares, the vesting of which may be time-based or upon satisfaction of performance criteria or other conditions.

The Company’s Amended and Restated 2003 Plan provides for the granting of stock options, stock appreciation rights (SARs), dividend equivalent rights, restricted stocks, RSUs, performance units and performance shares, the vesting of which may be time-based or upon satisfaction of performance criteria or other conditions.

As of June 28, 2025, the Company had 10.2 million shares subject to Full Value Awards (defined below) issued and outstanding and 7.8 million shares of common stock available for grant under the Amended and Restated 2003 Plan.

5 unchanged sentences

Full Value Awards

The Company's stock-based compensation includes a combination of time-based RSUs and performance- based MSUs and PSUs.

The Company's stock-based compensation includes a combination of time-based RSUs and MSUs and PSUs.

RSUs are granted without an exercise price and are converted to shares immediately upon vesting.

4 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.

VIAVI SOLUTIONS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Stock-Based Compensation

The impact on the Company’s results of operations of recording stock-based compensation expense by function for fiscal 2025, 2024 and 2023 was as follows ( in millions ):

June 29, 2024 July 1, 2023 July 2, 2022

Cost of revenue $ 4.9 $ 4.8 $ 5.2

June 28, 2025 June 29, 2024 July 1, 2023

Cost of revenues $ 5.7 $ 4.9 $ 4.8

Research and development 8.8 8.7 8.6

1 unchanged sentence

Total stock-based compensation expense $ 53.1 $ 49.4 $ 51.2

Approximately $ 1.2 million of stock-based compensation expense was capitalized to inventory at June 29, 2024 and July 1, 2023.

Approximately $ 1.0 million and $ 1.2 million of stock-based compensation expense was capitalized to inventory at June 28, 2025 and June 29, 2024, respectively.

Stock Option Activity

1 unchanged sentence

There were no stock options outstanding as of June 28, 2025.

VIAVI SOLUTIONS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Employee Stock Purchase Plan Activity

3 unchanged sentences

The cost will be recognized in the first quarter of fiscal 2026.

VIAVI SOLUTIONS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Full Value Awards Activity

A summary of the status of the Company’s non-vested Full Value Awards as of June 29, 2024 and changes during fiscal years 2022, 2023 and 2024 are presented below ( in millions, except Weighted-Average Grant Date Fair Value per share amounts ):

A summary of the status of the Company’s non-vested Full Value Awards as of June 28, 2025 and changes during fiscal 2023, 2024 and 2025 are presented below ( in millions, except Weighted-Average Grant Date Fair Value Per Share amounts ):

Full Value Awards

9 unchanged sentences

Awards forfeited ( 0.2 ) ( 0.3 ) ( 0.5 ) $ 15.55

Non-vested July 1, 2023 1.7 5.8 7.5 $ 15.06

Non-vested June 29, 2024 2.2 6.9 9.1 $ 12.51

Awards granted 1.5 4.6 6.1 $ 9.09

9 unchanged sentences

That cost is expected to be recognized over the remaining amortization period of 1.6 years.

VIAVI SOLUTIONS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Valuation Assumptions

3 unchanged sentences

The weighted-average assumptions used to measure fair value of performance-based awards with a market condition were as follows:

June 29, 2024 July 1, 2023 July 2, 2022

June 28, 2025 June 29, 2024 July 1, 2023

Volatility of common stock 37.6 % 34.8 % 31.2 %

2 unchanged sentences

Risk-free interest rate 3.9 % 4.9 % 3.4 %

VIAVI SOLUTIONS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The Company did no t issue stock option grants during the fiscal years ended June 29, 2024, July 1, 2023 and July 2, 2022.

The Company estimates the fair value ESPP purchase rights using a BSM valuation model.

The Company did no t issue stock option grants during the fiscal years ended June 28, 2025, June 29, 2024 and July 1, 2023.

The Company estimates the fair value of ESPP purchase rights using a BSM valuation model.

The fair value is estimated on the date of grant using the BSM option valuation model with the following weighted-average assumptions:

Employee Stock Purchase Plans

June 29, 2024 July 1, 2023 July 2, 2022

June 28, 2025 June 29, 2024 July 1, 2023

Expected term (in years) 0.5 0.5 0.5

22 unchanged sentences

The Company is responsible for a non-pension post-retirement benefit obligation assumed from a past acquisition, which is closed to new participants.

As of June 29, 2024 and July 1, 2023, the liability balances related to the non-pension post-retirement benefit plan were $ 0.3 million and $ 0.4 million, respectively.

As of June 28, 2025 and June 29, 2024, the liability balances related to the non-pension post-retirement benefit plan were $ 0.3 million.

The liability balances were included in Other non-current liabilities on the Consolidated Balance Sheets.

1 unchanged sentence

and Germany including the plan assumed in a prior acquisition.

Most of these pension plans have been closed to new participants and no additional service costs are being accrued, except for certain plans in Germany assumed in connection with an acquisition during fiscal 2010.

These pension plans have been closed to new participants and no additional service costs are being accrued, except for certain plans in Germany assumed in connection with an acquisition during fiscal 2010.

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

7 unchanged sentences

Court of Appeal upheld a ruling in the matter of Virgin Media Limited v NTL Pension Trustees II Limited, a decision that VIAVI was not a party to or involved in, that certain historical amendments for contracted out defined benefit schemes were invalid if they were not accompanied by the correct actuarial confirmation.

The Company and its U.K.

pension scheme trustee are reviewing this development and considering whether this decision has any implications for its U.K.

In June 2025, Department for Work and Pensions announced that the government will introduce legislation to give affected pension schemes the ability to retrospectively obtain written actuarial confirmation that historic benefit changes met the necessary standards.

The prospective legislation could significantly reduce the potential negative impact of the court decision in the Virgin Media case on U.K.

pension schemes, including the Company’s U.K pension scheme, as there would be an opportunity to pursue retrospective confirmation if necessary or applicable to validate historical amendments.

No expected timeline of when the legislation will come out has been announced.

The Company continues to monitor developments and assess potential impact for its U.K.

pension scheme.

The Company accounts for its obligations under these pension plans in accordance with the authoritative guidance which requires the Company to record its obligation to the participants, as well as the corresponding net periodic cost.

1 unchanged sentence

The obligation the Company records on its Consolidated Balance Sheets is reflective of the total PBO and the fair value of plan assets.

VIAVI SOLUTIONS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

June 29, 2024 July 1, 2023 July 2, 2022

Service cost $ — $ — $ 0.2

June 28, 2025 June 29, 2024 July 1, 2023

Interest cost $ 3.3 $ 3.3 $ 2.7

2 unchanged sentences

Net periodic benefit cost $ 1.7 $ 1.5 $ 0.9

VIAVI SOLUTIONS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The Company’s accumulated other comprehensive (loss) income includes unrealized net actuarial losses (gains).

The amount of unrealized net actuarial loss (gain) expected to be recognized in net periodic benefit cost during fiscal 2025 is $ 0.2 million.

The components of net periodic pension cost are included in Cost of revenues, R&D and SG&A in the Consolidated Statements of Operations.

The Company’s accumulated other comprehensive income (loss) includes unrealized net actuarial (gains) losses.

The amount of unrealized net actuarial (gain) loss expected to be recognized in net periodic benefit cost during fiscal 2026 is $ 0.2 million.

The changes in the benefit obligations and plan assets of the pension and benefits plans were ( in millions ):

Pension Benefit Plans

June 29, 2024 July 1, 2023

June 28, 2025 June 29, 2024

Change in benefit obligation

1 unchanged sentence

Interest cost 3.3 3.3

Actuarial losses (gains) 1.5 ( 4.2 )

Actuarial (gains) losses ( 3.1 ) 1.5

Benefits paid ( 6.2 ) ( 6.1 )

10 unchanged sentences

Accumulated benefit obligation $ 84.9 $ 83.7

VIAVI SOLUTIONS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Pension Benefit Plans

June 29, 2024 July 1, 2023

June 28, 2025 June 29, 2024

Amount recognized on the Consolidated Balance Sheets at end of year:

2 unchanged sentences

Non-current liabilities 53.8 50.8

Other changes in plan assets and benefit obligations recognized in other comprehensive (loss) income:

Net actuarial (loss) gain $ ( 2.1 ) $ 2.0

Amortization of accumulated net actuarial losses (gains) 0.1 ( 0.1 )

Total recognized in other comprehensive (loss) income $ ( 2.0 ) $ 1.9

During fiscal 2024, the Company contributed £ 1.0 million or approximately $ 1.3 million, while in fiscal 2023, the Company contributed £ 1.0 million or approximately $ 1.2 million to its U.K.

Other changes in plan assets and benefit obligations recognized in other comprehensive income (loss):

Net actuarial gain (loss) $ 0.1 $ ( 2.1 )

Amortization of accumulated net actuarial losses 0.2 0.1

Total recognized in other comprehensive income (loss) $ 0.3 $ ( 2.0 )

During each of fiscal 2025 and fiscal 2024, the Company contributed £ 1.0 million or approximately $ 1.3 million to its U.K.

pension plan.

These contributions allowed the Company to comply with regulatory funding requirements.

VIAVI SOLUTIONS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Underlying both the calculation of the PBO and net periodic cost are actuarial valuations.

4 unchanged sentences

The expected return on assets was estimated by using the weighted average of the real expected long-term return (net of inflation) on the relevant classes of assets based on the target asset mix and adding the chosen inflation assumption.

VIAVI SOLUTIONS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The following table summarizes the weighted average assumptions used to determine net periodic cost and benefit obligation for the Company’s U.K.

1 unchanged sentence

Pension Benefit Plans

June 29, 2024 July 1, 2023 July 2, 2022

June 28, 2025 June 29, 2024 July 1, 2023

Used to determine net periodic cost at end of year:

8 unchanged sentences

To achieve these objectives, the trustee of the U.K.

pension plan is responsible for regularly monitoring the funding position and managing the risk by investing in assets expected to outperform the increase in value of the liabilities in the long term and by investing in a diversified portfolio of assets in order to minimize volatility in the funding position.

pension plan is responsible for regularly monitoring the funding position and managing the risk by investing in assets expected to perform approximately in line with the liabilities and help minimize volatility in the funding position.

The trustee invests in a range of frequently traded funds (pooled funds) rather than direct holdings in individual securities to maintain liquidity, achieve diversification and reduce the potential for risk concentration.

The funded plan assets are managed by professional third-party investment managers.

VIAVI SOLUTIONS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Fair Value Measurement of Plan Assets

The following table sets forth the plan assets at fair value and the percentage of assets allocations as of June 28, 2025 ( in millions ):

Fair value as of

June 29, 2024

Target Allocation Total Percentage of Plan Assets Level 1 Level 2

Equity / Other 40 % $ 12.1 37.8 % $ — $ 12.1

Fixed income 100 % 32.5 98.8 % — 32.5

1 unchanged sentence

Total assets $ 32.9 100.0 % $ 0.4 $ 32.5

The following table sets forth the plan’s assets at fair value and the percentage of assets allocations as of July 1, 2023 ( in millions ):

Fair value as of

The following table sets forth the plan’s assets at fair value and the percentage of assets allocations as of June 29, 2024 ( in millions ):

Target Allocation Total Percentage of Plan Assets Level 1 Level 2

3 unchanged sentences

Total assets $ 32.0 100.0 % $ 2.9 $ 29.1

The Company’s pension assets consist of multiple institutional funds (pension funds) of which the fair values are based on the quoted prices of the underlying funds.

Pension funds are classified as Level 2 assets since such funds are not directly traded in active markets.

Equity / Other consists of several funds that invest primarily in U.K.

equities and other overseas equities as well as a small portion in liquid alternatives.

Fixed income consists of several funds that invest primarily in index-linked Gilts (over 5 year), sterling-denominated investment grade corporate bonds and overseas government bonds.

VIAVI SOLUTIONS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The Company’s pension assets consist of multiple institutional funds (pension funds) of which the fair values are based on the quoted prices of the underlying securities.

Pension funds are classified as Level 2 assets since such funds are not directly traded in active markets.

Fixed income consists of several funds that invest primarily in index-linked Gilts (over 5 years ), Gilts index (over 15 years), sterling-denominated investment grade corporate bonds and overseas government bonds.

Equity / Other consisted of several funds that invested primarily in U.K.

equities and other overseas equities as well as a small portion in liquid alternatives.

Future Benefit Payments

4 unchanged sentences

Royalty Payments

The Company is obligated to make future minimum royalty payments of $ 0.8 million measured as of June 29, 2024 for the use of certain licensed technologies.

Future minimum payments are expected to be paid through the third quarter of fiscal 2026, as follows ( in millions):

The Company is obligated to make future minimum royalty payments of $ 0.2 million measured as of June 28, 2025 for the use of certain licensed technologies, which are expected to be paid through the third quarter of fiscal 2026.

Purchase Obligations

Purchase obligations of $ 160.7 million as of June 28, 2025, represent legally-binding commitments to purchase inventory and other commitments made in the normal course of business to meet operational requirements.

Although open purchase orders are considered enforceable and legally binding, the terms generally allow the option to cancel, reschedule and adjust the requirements based on the Company’s business needs prior to the delivery of goods or performance of services.

Certain purchase orders allow the option to cancel, reschedule and adjust the requirements based on the Company's business needs prior to the delivery of the goods or performance of the services.

Obligations to purchase inventory and other commitments are generally expected to be fulfilled within one year .

1 unchanged sentence

The Company generally purchases these single or limited source products through standard purchase orders or one-year supply agreements and has no significant long-term guaranteed supply agreements with such vendors.

While the Company seeks to maintain a sufficient safety stock of such products and maintains on-going communications with its suppliers to guard against interruptions or cessation of supply, the Company’s business and results of operations could be adversely affected by a stoppage or delay of supply, substitution of more expensive or less reliable products, receipt of defective parts or contaminated materials, increases in the price of such supplies, or the Company’s inability to obtain reduced pricing from its suppliers in response to competitive pressures.

While the Company seeks to maintain a sufficient safety stock of such products and maintains on-going communications with its suppliers to guard against interruptions or cessation of supply, the Company’s business and results of operations could be adversely affected by a stoppage or delay of supply, substitution of more expensive or less reliable parts, receipt of defective parts or contaminated materials, increases in the price of such supplies, or the Company’s inability to obtain reduced pricing from its suppliers in response to competitive pressures.

VIAVI SOLUTIONS INC.

6 unchanged sentences

In August 2012 and May 2019, the Company entered into two lease amendments to extend the term of the lease to August 31, 2032 with a ten-year renewal option.

In the first quarter of fiscal 2020, the Company reassessed whether a sale would have occurred on the date of adoption of ASC 842 and, at which time, concluded that the buildings did not qualify for sale and lease back accounting in accordance with ASC 842.

In the first quarter of fiscal 2020, the Company reassessed whether a sale would have occurred on the date of adoption of ASC 842, Leases, and, at which time, concluded that the buildings did not qualify for sale and lease back accounting in accordance with ASC 842.

As a result, they were continuously accounted for as financing transactions.

As of June 28, 2025, $ 0.2 million was included in Other current liabilities , and $ 15.5 million was included in Other non-current liabilities on the Consolidated Balance Sheets.

As of July 1, 2023, $ 0.2 million was included in Other current liabilities , and $ 15.8 million was included in Other non-current liabilities on the Consolidated Balance Sheets.

As of June 29, 2024, $ 0.1 million was included in Other current liabilities , and $ 15.7 million was included in Other non-current liabilities on the Consolidated Balance Sheets.

As of June 28, 2025, future minimum annual lease payments of Santa Rosa’s non-cancelable leaseback agreements were as follows (in millions) :

11 unchanged sentences

Because the obligated amounts of these types of agreements often are not explicitly stated, the overall maximum amount of the obligations cannot be reasonably estimated.

Historically, the Company has not been obligated to make significant payments for these obligations, and no liabilities have been recorded for these obligations on the Consolidated Balance Sheets as of June 29, 2024 and July 1, 2023.

VIAVI SOLUTIONS INC.

10 unchanged sentences

The following table presents the changes in the Company’s warranty reserve during fiscal 2025 and 2024 ( in millions ):

June 29, 2024 July 1, 2023

June 28, 2025 June 29, 2024

Balance as of beginning of period $ 7.4 $ 9.0

29 unchanged sentences

Operating Segments and Geographic Information

The Company evaluates its reportable segments in accordance with the authoritative guidance on segment reporting.

The Company’s CODM uses operating segment financial information to evaluate segment performance and to allocate resources.

The Company’s reportable segments are:

(i) Network Enablement:

NE provides an integrated portfolio of testing solutions that access the network to perform build-out and maintenance tasks.

These solutions include instruments, software and services to design, build, turn-up, certify, troubleshoot and optimize networks.

NE also offers a range of product support and professional services such as repair, calibration, software support and technical assistance for its products.

NE’s avionics products provide test and measuring solutions for aviation, aerospace, government, defense, communications and public safety.

(ii) Service Enablement:

SE provides embedded systems and enterprise performance management solutions that give global communications service providers, enterprises and cloud operators visibility into network, service and application data.

These solutions—including instruments, microprobes and software—monitor, collect and analyze network data to reveal the actual customer experience and to identify opportunities for new revenue streams and network optimization.

(iii) Optical Security and Performance Products:

OSP leverages its core optical coating technologies and volume manufacturing capability to design, manufacture, and sell technologies for the anti-counterfeiting, consumer electronics, industrial, government and automotive markets.

The Company evaluates its operating segments in accordance with the authoritative guidance on segment reporting.

The Company’s Chief Executive Officer as the Company’s CODM uses operating segment financial information to evaluate segment performance and to allocate resources.

The Company’s operating and reportable segments are:

(i) Network and Service Enablement:

NSE provides an integrated portfolio of testing, monitoring, assurance and security solutions to help build, maintain, and optimize telecom and datacom networks .

Our solutions address lab and production environments, network management, service assurance and AIOps for any kind of network, including wireless, wireline, cloud, satellite, public safety, military and critical infrastructure.

NSE also offers a range of product support and professional services such as repair, calibration, software support and technical assistance for its products.

(ii) Optical Security and Performance Products:

OSP leverages its core optical coating technologies and volume manufacturing capability to design, manufacture, and sell technologies for the anti-counterfeiting, 3D sensing, government and aerospace, automotive and industrial markets .

Effective March 30, 2025, the Company realigned its segment reporting structure.

As a result, the company’s Network Enablement (NE) and Service Enablement (SE) business activities are now reported as a single operating and reportable segment, NSE.

Recent acquisitions have reduced the SE segment revenue as a percentage of total VIAVI revenue.

In addition, NE and SE are managed under common leadership, share many of the same customers and suppliers and operating expenses associated with the NSE business are not exclusively allocated to either NE or SE.

The Company has applied this change retrospectively in the disclosures herein.

Segment Reporting

The CODM manages the Company in two broad business categories:

The CODM evaluates segment performance of the NSE business based on the combined segment gross and operating margins.

Operating expenses associated with the NSE business are not allocated to the individual segments within NSE, as they are managed centrally at the business unit level.

The CODM evaluates segment performance of the OSP business based on segment operating margin.

The CODM evaluates segment performance of the NSE and OSP business based on segment operating margins.

The CODM uses segment operating margin to make budgeting and forecasting decisions and to assess the performance of our segments, primarily by monitoring actual results versus the prior year, the annual budget and forecasted results.

In addition, the CODM reviews inventory levels by segment.

The Company allocates corporate-level operating expenses to its segment results, except for certain non-core operating and non-operating activities as discussed below.

The Company does not allocate stock-based compensation, acquisition-related charges, amortization of intangibles, restructuring, impairment of goodwill, non-operating income and expenses, changes in fair value of contingent consideration liabilities, or other charges unrelated to core operating performance to its segments because management does not include this information in its measurement of the performance of the operating segments.

These items are presented as “Other Items” in the table below.

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

VIAVI SOLUTIONS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The Company does not allocate stock-based compensation, acquisition and integrated related charges, amortization of acquisition related intangibles, amortization of acquisition related inventory step-up, legal settlements, restructuring, changes in fair value of contingent consideration liabilities, non-operating income and expenses, or other charges unrelated to core operating performance to its segments because management does not include this information in its measurement of the performance of the operating segments.

These items are presented as “Unallocated other expenses” in the table below.

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

Information on the Company’s reportable segments is as follows ( in millions ):

Year Ended June 28, 2025

Network and Service Enablement

Network Enablement Service Enablement Network and

Enablement Optical Security and Performance Products Other Items (1)

Consolidated GAAP Measures

Enablement Optical Security and Performance Products Total

Product revenue $ 604.3 $ 307.7 $ 912.0

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Net revenue 776.6 307.7 1,084.3

Gross profit $ 382.3 $ 57.3 $ 439.6 $ 154.9 $ ( 18.6 ) $ 575.9

Gross margin 62.1 % 66.4 % 62.6 % 51.9 % 57.6 %

Operating income $ 8.0 $ 107.0 $ ( 94.2 ) $ 20.8

Operating margin 1.1 % 35.9 % 2.1 %

Year Ended July 1, 2023

Network and Service Enablement

Network Enablement Service Enablement Network and

Enablement Optical Security and Performance Products Other Items (1)

Consolidated GAAP Measures

Cost of revenues 288.7 144.2

Research and development 179.3 17.3

Selling, general and administrative 165.7 23.8

Other segment items (1)

Total operating expense 446.3 51.2

Segment operating income $ 41.6 $ 112.3 $ 153.9

Segment operating margin 5.4 % 36.5 %

Unallocated other expenses ( 96.4 )

Interest and other income, net 11.1

Interest expense ( 30.0 )

Income before income taxes and equity investment earnings $ 38.6

Inventories, net $ 74.4 $ 43.5 $ 117.9

Assets not allocated to segments 1,875.9

Total assets $ 1,993.8

VIAVI SOLUTIONS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Year Ended June 29, 2024

Enablement Optical Security and Performance Products Total

Product revenue $ 536.4 $ 298.4 $ 834.8

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Net revenue 702.0 298.4 1,000.4

Gross profit $ 447.6 $ 62.6 $ 510.2 $ 158.6 $ ( 30.0 ) $ 638.8

Gross margin 63.3 % 66.6 % 63.7 % 52.0 % 57.8 %

Operating income $ 61.2 $ 111.3 $ ( 90.1 ) $ 82.4

Operating margin 7.6 % 36.5 % 7.4 %

Cost of revenues 262.4 143.5

Research and development 173.5 16.5

Selling, general and administrative 160.7 23.2

Other segment items (1)

Total operating expense 431.6 47.9

Segment operating income $ 8.0 $ 107.0 $ 115.0

Segment operating margin 1.1 % 35.9 %

Unallocated other expenses ( 94.2 )

Interest and other income, net 21.7

Interest expense ( 30.9 )

Income before income taxes and equity investment earnings $ 11.6

Inventories, net $ 53.1 $ 43.4 $ 96.5

Assets not allocated to segments 1,639.8

Total assets $ 1,736.3

Year Ended July 1, 2023

Network and Service Enablement

Network Enablement Service Enablement Network and

Enablement Optical Security and Performance Products Other Items (1)

Consolidated GAAP Measures

Enablement Optical Security and Performance Products Total

Product revenue $ 631.3 $ 304.8 $ 936.1

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Net revenue 801.2 304.9 1,106.1

Gross profit $ 550.8 $ 64.3 $ 615.1 $ 193.6 $ ( 35.2 ) $ 773.5

Gross margin 64.4 % 68.8 % 64.8 % 56.4 % 59.8 %

Operating income $ 147.8 $ 139.0 $ ( 101.8 ) $ 185.0

Operating margin 15.6 % 40.5 % 14.3 %

(1) See below tables for details of reconciling items impacting gross profit and operating income.

Cost of revenues 291.0 146.3

Research and development 178.6 15.0

Selling, general and administrative 167.8 24.1

Other segment items (1)

Total operating expense 449.0 47.3

Segment operating income $ 61.2 $ 111.3 $ 172.5

Segment operating margin 7.6 % 36.5 %

Unallocated other expenses ( 90.1 )

Loss on convertible note modification ( 2.2 )

Interest and other income, net 7.6

Interest expense ( 27.1 )

Income before income taxes and equity investment earnings $ 60.7

Inventories, net $ 67.9 $ 48.2 $ 116.1

Assets not allocated to segments 1,734.4

Total assets $ 1,850.5

(1) Other segment items represents allocation of corporate level operating expenses.

VIAVI SOLUTIONS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

June 29, 2024 July 1, 2023 July 2, 2022

Corporate reconciling items impacting gross profit:

Total segment gross profit $ 594.5 $ 668.8 $ 808.7

Stock-based compensation ( 4.9 ) ( 4.8 ) ( 5.2 )

Amortization of intangibles ( 13.8 ) ( 24.6 ) ( 30.0 )

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

0.1 ( 0.6 ) —

Total reconciling items ( 18.6 ) ( 30.0 ) ( 35.2 )

GAAP gross profit $ 575.9 $ 638.8 $ 773.5

Corporate reconciling items impacting operating income:

Total segment operating income $ 115.0 $ 172.5 $ 286.8

Stock-based compensation ( 49.4 ) ( 51.2 ) ( 52.3 )

Amortization of intangibles ( 20.1 ) ( 33.3 ) ( 39.7 )

Change in fair value of contingent liability 9.5 4.6 ( 0.3 )

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

( 20.6 ) 1.9 ( 9.6 )

Restructuring and related (charges) benefits ( 13.6 ) ( 12.1 ) 0.1

Total reconciling items ( 94.2 ) ( 90.1 ) ( 101.8 )

GAAP operating income $ 20.8 $ 82.4 $ 185.0

(1) For the year ended June 29, 2024, Other charges (benefits) unrelated to core operating performance consisted of $ 18.1 million of certain acquisition and integration related charges and $ 2.5 million of net losses primarily related to long-lived assets.

For the year ended July 1, 2023, Other charges (benefits) unrelated to core operating performance consisted of a $ 6.7 million gain on litigation settlement, offset by $ 2.5 million of certain acquisition and integration related charges and $ 2.3 million of net losses primarily related to long-lived assets.

For the year ended July 2, 2022, Other charges (benefits) unrelated to core operating performance consisted of $ 5.1 million of certain acquisition and integration related charges and $ 4.5 million of net losses primarily related to long-lived assets.

The Company operates primarily in three geographic regions:

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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.

VIAVI SOLUTIONS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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 years ended June 29, 2024, July 1, 2023 and July 2, 2022 ( in millions ):

June 29, 2024 July 1, 2023 July 2, 2022

T he 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 years ended June 28, 2025, June 29, 2024 and July 1, 2023 ( in millions ):

June 28, 2025 June 29, 2024 July 1, 2023

Product Revenue Service Revenue Total Product Revenue Service Revenue Total Product Revenue Service Revenue Total

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Greater China $ 209.1 $ 6.0 $ 215.1 $ 188.1 $ 5.9 $ 194.0 $ 203.5 $ 7.4 $ 210.9

Other Asia 126.5 26.0 152.5 140.2 26.4 166.6 185.2 20.1 205.3

Other Asia-Pacific 136.0 28.5 164.5 126.5 26.0 152.5 140.2 26.4 166.6

Total Asia-Pacific $ 345.1 $ 34.5 $ 379.6 $ 314.6 $ 31.9 $ 346.5 $ 343.7 $ 33.8 $ 377.5

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Total net revenue $ 912.0 $ 172.3 $ 1,084.3 $ 834.8 $ 165.6 $ 1,000.4 $ 936.1 $ 170.0 $ 1,106.1

One customer of the Company generated $ 154.1 million, $ 157.7 million and $ 178.4 million of net revenue, which represented more than 10% of total net revenue, during fiscal 2024, 2023 and 2022, respectively.

Property, plant and equipment, net was identified based on the operations in the corresponding geographic areas ( in millions ):

June 29, 2024 July 1, 2023

One customer of the Company in the OSP segment generated $ 166.7 million, $ 154.1 million and $ 157.7 million of net revenue, which represented more than 10% of total net revenue, during fiscal 2025, 2024 and 2023, respectively.

Property, plant and equipment, net and Operating ROU assets, net were identified based on the operations in the corresponding geographic areas ( in millions ):

June 28, 2025 June 29, 2024

United States $ 181.2 $ 178.8

Other Americas 2.6 3.4

China 24.1 33.6

Greater China 23.6 28.8

Other Asia-Pacific 8.9 8.6

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Other EMEA 26.4 23.6

Total property, plant and equipment, net $ 228.2 $ 243.0

Total property, plant and equipment, net and Operating ROU assets, net $ 266.0 $ 264.0

VIAVI SOLUTIONS INC.

6 unchanged sentences

The Company recorded $ 7.1 million in the form of R&D credits in the Consolidated Statements of Operations during fiscal 2025 under the VALOR Grant.

In addition, funding of $ 1.3 million offset the carrying value of lab equipment purchased as of June 29, 2024.

In addition, funding of $ 1.4 million offset the carrying value of lab equipment purchased during the fiscal year ended June 28, 2025.

For the year ended June 28, 2025, we received cash reimbursement of $ 10.5 million and had pending receipts of $ 0.6 million included in Prepayments and other current assets on the Consolidated Balance Sheets.

Other Government Assistance

The Company recorded approximately $ 5.3 million in the form of R&D credits for other government assistance in the Consolidated Statements of Operations during fiscal 2024.

The Company recorded approximately $ 10.6 million for other government assistance, primarily R&D credits , in the Consolidated Statements of Operations during fiscal 2025.

As of June 28, 2025, the Company had pending receipts of approximately $ 17.5 million related to other government assistance included in Prepayments and other current assets on the Consolidated Balance Sheets.

1 unchanged sentence

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-K

Item 8. Financial Statements and Supplementary Data